Zomato QIP is IPO 2.0 but not much has changed in terms of fundamentals

After last raising cash over three years ago, new age startup Zomato is back at it. It will be raising Rs 8,500 crore through a qualified institutional placement (QIP), only a little short of the Rs 9,000 crore it raised in its IPO in 2021. The company has many good things to show for it: newly gained net profitability (for six quarters), exhilarating growth in gross order value and revenue, and a 3.5 times jump in the share price! Getting the funds will not be tough. But the puzzling part is what a cash-rich, debt-free company that has over Rs 12,000 crore of liquid assets (Rs 10,333 crore in bonds, mutual funds, company stakes) needs more cash for? The management says it's to "strengthen the balance sheet and ensure a level playing field with competitors, who continue to raise additional capital". The balance sheet is already strong, so we assume it has more to do with the second reason. Why the QIP As acknowledged by the management, the timing of the fundraiser is no coincidence. Zomato's rivals are raising enormous amounts of money. Swiggy will raise Rs 3,750 crore in its coming IPO, while Zepto recently closed its latest funding round of over Rs 8,000 crore. Going by media reports, the slew of industry-wide fundraisers is to weather competition in the quick delivery segment that is intensely heating up. Zo