Zomato founder and CEO Deepinder Goyal has mooted a new identity and mission for the food delivery company, even as its stock witnessed massive sell-off pressure last week.
Goyal's note, posted on the company's Slack channel, was written last week, after shareholders approved its acquisition of Blinkit, a grocery delivery startup that was previously called Grofers.
"Now that the Zomato Blinkit deal is approved, we have three companies- Zomato, Blinkit and Hyperpure - in the order of business size/impact. In addition to these three, we also have Feeding India. We are now at a stage of life where we are maturing from running (more or less) a single business to running multiple large companies," Goyal wrote in the message, which Moneycontrol has viewed.
"We are transitioning from a company where I was the CEO to a place where we will have multiple CEOs running each of our businesses , all acting as peers to each other, and working as a super team with each other towards building a single large and seamless organisation. Starting today, we are going to call this larger organisation 'Eternal'," he added.
Goyal explained that Eternal is a mission statement in itself, as it means forever, something that will last for more than just a few lifetimes.
"Boundless, timeless, undying, endless, permanent- are some of the words that can be used to describe Eternal. Eternal will have multiple companies- it already has Zomato (delivery plus dining out), Blinkit, Hyperpure and Feeding India. Eternal will be an internal name for now- you should start seeing the Eternal logo at a few places in our new office. As well as some t-shirts". he further said.
At present, Blinkit (erstwhile Grofers) is led by co-founder and CEO Albinder Dhindsa and Feeding India, a non-profit that was acquired in 2019, is headed by Vishal Kumar. In the run up to the company's IPO, Rahul Ganjoo was appointed the CEO of food delivery in 2020. Ganjoo had replaced Mohit Gupta who was elevated as co-founder and CEO of new businesses.
To be sure, sources said this was one of the many ideas that Goyal floats on the company's slack channel and that one cannot be sure if it will be implemented. But the messaging gives a peek into Goyal's thinking, as Zomato increasingly wants to model itself after one of its early investors and largest shareholders- Info Edge. A group company that will have a range of business interests.
"Zomato is not Info Edge the second. It is Zomato the first. They are taking independent calls that are in the best insterests of the company. And they are charting their own path," said Info Edge founder Sanjeev Bikhchandani, reacting to the developments.
It is already moving in this direction, having made financial and strategic investments in a clutch of startups since it went public last year, as it seeks to expand beyond food delivery to logistics and food robotics.
Apart from the $570 million Blinkit acquisition, Zomato has made at least six minority investments worth around $200 million in the last one year – including $75 million in Shiprocket, $50 million each in Magicpin and Curefit.
It has also invested $5 million in food robotics company Mukunda, apart from $15 million in adtech company Adonmo and $5 million in restaurant software company UrbanPiper, since the foodtech major's stock market debut in July last year.
Moneycontrol has previously reported on Zomato's strategy to build an investment portfolio on top of its mainstay food delivery business, similar to the approach that Info Edge has in India or Tencent has in China.
While it is not clear if Zomato group will morph to Eternal, the idea also comes at a time when Zomato has seen intense sell-off pressure, as the lock-in period for around 613 crore shares or 78 percent of Zomato's stock ended on July 23.
For instance, venture capital firm Moore Strategic Ventures has exited its entire holding of 4.25 crore shares in the company at Rs 44 apiece, according to block deal data. The cumulative size of the trade executed by Moore was around Rs 187 crore whereas it had bought the holdings for Rs 191 crore before the foodtech company’s initial public offering. Zomato’s market capitalisation has fallen below its last private market valuation of $5.5 billion.
Meanwhile, valuation guru Aswath Damodaran has put the stock under radar, and downgraded the valuation to Rs 35, as against Rs 41 that he himself had ascribed a year ago.
“The company and the market have changed”, he added in a blog post. “The value per share has dropped from Rs 40.79 to Rs 35.32 per share, with much of the value change from last year coming from macroeconomic developments, manifested in a higher cost of capital,” Damodaran said.
“For this value to be generated, the company will need to stop paying lip service to contribution margins and adjusted EBITDA, and work on reducing growth in its cost of goods sold.”
Zomato was not immediately available for a comment. We will update the copy with the company's response.