Zomato is ready
Solving problems, major earnings, and Freshworks preps for US bid.
Hi 👋, Tanvi here.
Filter Coffee hits your inbox every morning with notable tech and business news scoops to jump start your day.
Sign up below for free. 👇
Let’s go ahead and get started:
Market summary: 📊
Investors are somehow managing to stay positive despite the broad sentiment. US had a mixed day, with tech again taking a beating.
US:
S&P 500 - down 0.085%
Nasdaq 100 - down 0.42%
India:
Nifty 50 - up 1.44%
Sensex - up 1.61%
What’s brewing hot? ☕
✅ Local innovation win—a Chennai based startup built India’s first 3D printed house, based on a design made by a few IITM alumni, with the proof of concept completed from start to finish in a record 5 days. The 600-odd sq. feet structure utilized a custom concrete-3D printing tech, which will be licensed and commercialized by the venture. India has nearly 80 million families lacking access to decent housing, and a low-cost, quick-to-market solution could be a game changing answer to the issue.
Cat’s out the bag 🙌
Zomato is all set to go public, trying to raise $1.1 billion from the street—offering the average investor a rare opportunity to taste the fruits of the internet-driven India growth story.
Docs were submitted just yesterday, and Zomato will issue almost a billion dollar in new shares for the streets, while its long-time and major shareholder Info Edge will offload about $100 million of its own holding. FYI, the business was valued at $5.4 billion last.
Some notable details in the prospectus:
Revenues of about $336 million, up more than 98%—thanks to the generational growth opportunity delivered by 2020 lockdowns to food delivery companies.
Losses jumped almost 2.4 times too, burning a Jupiter sized ~$300 million hole into the bottomline—mostly due to tough operating conditions during COVID
Here’s a link to the prospectus for the nerds.
Before going public, the business will conduct one last $200 million raise to strengthen the balance sheet, straighten out ops, while actively ensuring a solid governance structure in place.
Meanwhile, Info Edge India (holding company that runs Naukri, Shaadi, and a bunch of other digital businesses in India), which is also one of Zomato’s earliest backers, is set to make bank, owning almost 19% of the business, which could easily be worth over a billion dollars!
Interesting fact?
Info Edge’s founder Sanjeev Bikhchandani had cold emailed Deepinder a decade ago after using his app, then FoodieBay, to find restaurant menus in the NCR region for a couple months. Deepinder responded the next day, and the duo shook hands on an investment in 72 hours.
What do the behemoths say? 🧐
Few major earnings offered Dalal Street key insights into the state of the broad economy, or at least how things used to be until last month…
Quick rundown:
After two back to back quarters of solid growth, Maruti saw its profits drop a bit, lower 10.7% YoY to ₹1.2K crores, primarily because of rising costs in raw materials and broken supply chains. Revenues rose a healthy 26% to ₹24K crores though, with 28% more cars sold this time than last year.
Offering a better pulse into consumer spend is cookie-giant Britannia, which saw revenue rising 9% YoY to ₹3.1K crores, but again, profits were down 3% after 6 straight quarters of growth thanks to rising raw material costs. Margins increased by a tiny bit though, if that’s any consolation...
Finally, Bajaj Finance reported an increase of 42% in net profits despite revenues tanking about 2.4%. Bad loans dropped, and deposits grew. Markets quickly rewarded the stock by 3%.
Overall, the results signal very solid improvements in consumer spending before the pandemic’s attack started again.
That wont hold going ahead though—and instead problems with rising raw material costs and broken supply chains are likely to compound, throwing these companies another major curveball.
But… since major Indian corporations did such a great job of navigating through the most uncertain times of the pandemic from May to July 2020, investors seem to be comfortable betting that we will be fine during the current crisis too.
The lumber affair 📈
move along Bitcoin, we have a new fighter...
What’s happening—lumber, the most unusual of commodities, is seeing its prices skyrocket in the US, thanks to record volumes in new home construction.
Unlike how homes in India are mostly built to last using stone and concrete, folks in the western world still majorly rely on wood-enacted structures for most part in residential construction.
Anyway, home sales are through the roof and prices of lumber have jumped nearly 500% in the last 12 months alone.
What’s driving this:
Millennials moving into the suburbs, with their kids on one hand, and the work from home laptop in another clearing out homes on the market like hot cake
Big IPOs, Stimulus, Savings—all that has meant a record amount of cash is floating around, and where else will the common man put the dough other than stonks and perhaps a second home?
Record low interest rates—may sound ridiculous, but you could get a 30 year home loan for 2.85%, pretty much across any town and village in the US today…
Key takeaway: a similar situation of low interest rates and tons of cash flooding the market, combined with lax lending practices had given us the 2008 financial crisis, and we all know how that ended. So 2.0?
Closing out—you gain some, you lose some... 😢
While Zomato stayed local, one of the largest SaaS companies to ever come out of India, Freshworks, is prepping docs for a US bid. Bankers are being courted, and apparently Morgan Stanley is in the lead.
The business has had an impressive run, starting as a simple low cost customer support platform, and eventually growing into an extensive menu of SaaS products—spanning marketing, HR, customer service, and other.
Eyes are set for a $10 billion valuation, and when you consider their $300 million revenue base, growing 40% YoY, amidst solid cloud computing tailwinds right now, should be a walk in the park to convince investors...
Would’ve been nice to have this stay local tho.
What else are we snackin’
🙌 Crypto rises to the occasion - COVID-19 relief fund set up by Polygon Co-founder Sandeep Nailwal raised donations worth over $2.2 million in crypto assets for India, including from the creator of Ethereum, who donated tokens worth almost $650,000
😷 Fight tech to make oxygen - DRDO will be setting up over 500 medical oxygen plants in the country under the PM cares fund programme, using tech that was originally used to provide oxygen onboard the light combat aircrafts.
Hit that 💚 if you liked today’s issue.
You can forward this email or share FC on social media by clicking the button below. Thanks and Ciao! 😀