Online food delivery market in India consolidates into a virtual duopoly as investors get prudent

0 August 2020
S R U A
A INTERNET
ONLINE FOOD DELIVERY

A fading battle of ‘capital burn’
Investors becoming Lower-tier cities hold Downgrade Info Edge

more prudent the key to growth and from BUY to HOLD on
on funding sustainability stretched valuations
10 August2020
SECTOR UPDATE
INDIA INTERNET
TABLE OF CONTENTS
INDIA INTERNET Prince Poddar

prince.poddar@jmfl.com
03 Introduction Tel: (91 22) 622418
04 Focus charts
Swapnil Potdukhe
MAIN THEMES swapnil.potdukhe@jmfl.com
06 Food delivery space – a virtual duopoly now Tel: (91 22) 62241876
06 Large-ticket investments decimated the competition

08 ....and led to penetration beyond the traditional markets
10 Lower tier cities and cloud kitchens - key to growth dynamics and sustainable profitability
13 Investors getting more prudent with funding
14 Period of high-cash burn for volume growth looks like nearing its end – but who knows!
16 Indian market is far from mature
18 Sizing up the online food delivery market for aggregators!
20 Critical factors for long-term sustainability
22 How the two incumbents stack up
COMPANY JM Financial Research is also

available on:
23 Info Edge: Stretched valuations; downgrade to HOLD Bloomberg – JMFR <GO>,
Thomson Publisher & Reuters
S&P Capital IQ, FactSet and
Visible Alpha
Please see Appendix I at the end of

this report for Important Disclosures
and Disclaimers and Research
Analyst Certification.
You can also access our portal

www.jmflresearch.
RECENT REPORTS
IndiaMART Intermesh Fin-tech Day Digital Payments Digital Insurance
JM Financial Institutional Securities Limited Page 2

10 August 2020
SECTOR UPDATE
INDIA INTERNET
Are we in the last mile yet?

After about a decade since online food ordering through aggregators began in India, the space today is at an interesting juncture. While the
pioneers no longer exist, the industry is now essentially a two-horse race between Zomato and Swiggy. This is because several players made
hasty retreats when the opportunity came knocking while a few others shut down permanently likely due to their inability to scale up and/or
belief that prospects of achieving positive unit economics were grim. However, we believe the main reason for this consolidation is that
demand over the years was largely stimulated by exceptionally high levels of marketing and promotional spends (cash-backs, discounts,
referrals, subsidised delivery fees, etc.). Essentially, these companies were growing mainly on the back of constant funding support.
Therefore, it is not surprising to see that while external investors cumulatively pumped in around USD 2.3bn worth of primary funds in the
industry (excluding any investments from self-funded companies such as Uber and Ola in their respective food delivery businesses), the two
companies that have managed to survive the churn have till date together cornered ~95% of these funds.
However, a fallout of this funding-driven growth strategy was the lack of discussion on unit economics. The entire focus of the industry over
the last decade has been growing the gross merchandise value (GMV), with little to no debate on earning sustainable revenues, hitting
profitability and growing profit pools (to be fair, this has been the global play book for most internet first companies). However, the two-
player market dynamic that we have today, in which both competitors seem closely matched (in most aspects), is leading to several structural
changes in the online food delivery industry in India. These include 1) lower tier cities and cloud kitchens increasingly becoming important for
incumbents to ensure long-term growth and sustainable profitability (owing to surprisingly better unit economics) and 2) with investors
getting more prudent with funding decisions, the race to on-board new users and grow order volumes at the expense of high cash burn had
subsided even before the impact of the current crisis. However, we note that the recent entry of Amazon in the food delivery space may
force a restart of cash burn for the two incumbents.
Why you should read this report:
 Provides a detailed understanding on how the online food delivery industry turned in to the duopoly we see today
 Explains in detail the recent changes in dynamics of the online food delivery industry
 Provides insight into how Indian online food delivery aggregators have performed during the current crisis
 Sizing up the online food delivery market
Lower tier cites and cloud kitchens are likely to emerge as the With investors becoming prudent with funding decisions, the
drivers of long-term growth and sustainable profitability high cash burn era ended even before the current crisis
Contrary to popular perceptions, we believe the two main Over CY10-20 (YTD), online food delivery aggregators
growth drivers for online food aggregators going forward will together raised ~USD 2.3bn in external funds. However,
be their ability to 1) penetrate further in the large long-tail of ~95% of these were cornered by just two aggregators that
lower tier cities and 2) leverage the cloud kitchens that offer a have managed to survive the churn - Swiggy and Zomato.
differentiating proposition of standardised/curated food meals With the market now a virtual duopoly, investors are getting
at reasonable prices. Further, both these factors also tend to more prudent with funding decisions, forcing companies to
offer better business economics, which is crucial to the work on ensuring sustainable profitability and thus marking
growing discussion on ensuring sustainable profitability. an end to high cash burns.
We estimate that the online food delivery market to grow from We believe the Indian online food delivery market is far from
USD 3.6bn in FY20 to USD 8.6bn (19% CAGR) by FY25 mature compared with Western/Chinese markets
Our analysis indicates that the online food delivery market for Data suggests while food aggregators in Western/Chinese
aggregators in India in gross merchandise value (GMV) terms markets managed to recover/grow volumes within just 2-3
was worth USD 3.6bn in FY20. We expect it to grow to USD months of the pandemic, their Indian counterparts expect the
8.6bn by FY25 (CAGR of 19%), despite the likely decline in the recovery to be more gradual and prolonged. This contrast
market size in FY21 due to the on-going pandemic. This growth indicates that the exponential demand for food deliveries in
is likely to be driven by an increase in both volume (+12% the recent past was less organic in nature and therefore the
CAGR) as well as average order value (+7% CAGR). domestic market is far from mature.

Internet 10 August 2020
Focus Charts
Exhibit 1. Indian online food delivery marketplaces have cumulatively Exhibit 2. … but ~95% of these funds have been cornered by only
raised c. USD 2.3bn primary funds from external investors till-date… two players, Swiggy and Zomato
Yearly funding trends (USD mn) Cumulative funds raised (USD mn) 1,429
1,472
189 213
94 89 102 743
53 66
3
2
1 4 5 12 17 20 24 30
2020 (YTD)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Zomato
TastyKhan
Jugnoo
FoodPand
Tinyowl
Runner
Scootsy
Swiggy
Others
a
a
Source: Tracxn, JM Financial. Note: We have excluded secondary funding. Source: Tracxn, JM Financial. Note: We have excluded secondary funding.
Exhibit 3. With a substantial drop in number of days to launch as well Exhibit 4. … both Swiggy and Zomato have substantially scaled up
as initial cost to launch in new cities… their food delivery presence in the last two years
Swiggy: Cost and time taken to launch in a new city FY18 FY19 FY20
550+
USD 25,000 520+
Earlier Now
USD 2,700
90 200+
130+
7 15
Swiggy Zomato
No. of days to launch in a new city Cost to launch in a new city Food delivery services in cities
Source: Prosus, JM Financial Source: Zomato, Prosus, JM Financial
Exhibit 5. Both Zomato and Swiggy have scaled up their revenues since FY17 on the back of substantial cash burn
FY17 FY18 FY19
25,000
20,000
15,000
10,000
5,000
0
Zomato Swiggy Zomato Swiggy
Revenue (INR mn) EBITDA loss (INR mn)
Source: VCC Edge, JM Financial. Note: Consolidated financials for both the companies

Exhibit 6. Zomato believes that business economics in non-metro Exhibit 7. Ability to charge higher commissions make cloud kitchens a
cities are better than metros despite lower average order value very attractive proposition to online food delivery companies
Metro cities Non-metro cities 25%
X Y T T-3
0.8X 15-20%
0.5Y
Average order value Cost of delivery Delivery times (mins) Other restaurants Cloud kitchen*
Source: Zomato, JM Financial. Note: Data is as of Oct’19. Source: Media reports, JM Financial. Note: * indicates with minimum business guarantees.
Exhibit 8. Zomato’s recent reporting indicates substantial Exhibit 9. … which is likely to be the case for Swiggy as well based on
improvement in take rates and contribution margins… Prosus commentary and media reports
Take rate
22.0%
21.6%
21.5%
21.0%
20.5%
20.1%
20.0%
19.5%
19.0%
FY19 FY20
Source: Zomato, JM Financial. Note: Take Rate = Revenue from delivery business divided by GMV. Source: Zomato, JM Financial
Exhibit 10. We estimate the online food delivery market for Exhibit 11. We also estimate an annual average order value increase
aggregators to grow from ~USD 3.6bn in FY20 to USD 8.6bn (19% of 7% over FY20-FY25F
CAGR) by FY25
390 Average Order Value (INR)
9 8.6
GMV (USD bn) 369
370
8 7.3
7 350
6.1
6
330
4.8
5
310
4 3.6
2.9 290
3
263
2 270
1
250
0 FY20E FY21F FY22F FY23F FY24F FY25F
FY20E FY21F FY22F FY23F FY24F FY25F Source: JM Financial
Source: JM Financial

Food delivery space – virtually a duopoly now…

Indian consumers were first introduced to online food ordering through aggregators by early
entrants such as Just Eat and TastyKhana. This was during the early 2010s, when the food
service industry, especially the delivery space, was largely unorganised in nature (barring the
pizza delivery businesses). There were demand-side challenges such as a small target
customer base (within a few kms), low order values and customers’ reluctance to pay extra
for delivery/packaging. On the other hand, supply-side challenges included limited ordering
options (only a few restaurants used to provide delivery services), less variety in cuisines, no
organised platform to verify/track quality standards of restaurants and low focus on timely
deliveries. Basically, the food delivery industry was ripe for disruption through technology
intervention when the previously-mentioned pioneers entered the fray.
Over the next few years, several other prominent and well-funded international/domestic
players such as Delivery Hero, Uber Eats and Ola, to name a few, took a stab at breaking
through the world’s second most populous market.
Exhibit 12. – Entry and permanent exit timeline for some of the online food delivery aggregators in India
…as a series of large-ticket investments in 2018 virtually

decimated the competition while…
Today, the industry is at an interesting juncture. While the pioneers no longer exist, the
industry is now essentially a two-horse race between Zomato and Swiggy. This is because
several players have made hasty retreats when the opportunity came knocking while a few
others shut down permanently likely due to the inability to scale-up and/or declining
prospects of achieving positive unit economics.
Exhibit 13. The Indian online food delivery space today has turned in to a virtual duopoly following shutdown/exists/M&As of other
competitors
Period Target/ Business Acquirer Major Seller/Owner Deal Value (USD mn)
Nov'14 TastyKhana FoodPanda Delivery Hero 15-25
Feb'15 JustEat India FoodPanda Just Eat Plc. NA
Jun'16 Tinyowl Runnr - NA
Mar'16 Ola Café NA Ola NA
Dec'16 FoodPanda Delivery Hero Rocket Internet NA
Sep'17 Runnr Zomato - 40
Dec'17 FoodPanda Ola Delivery Hero 31.7
Aug'18 Scootsy Swiggy - 8
May'19 FoodPanda NA Ola NA
Jan'20 Uber Eats India Zomato Uber Inc. 206
Jun'20 Scootsy NA Swiggy NA
Source: Company, Media Reports, JM Financial. Note: Highlighted businesses were shut down by their owners.

Exhibit 14. In fact, there have been several back to back M&As in the global online food delivery space as well – few recent examples below
Period Market Target Acquirer Major Seller Deal Value (USD mn)
Apr'19 Germany Delivery Hero Germany Takeaway Delivery Hero 1,100
Nov'19 USA Caviar DoorDash Square 410
Dec'19 South Korea Woowa Brothers Delivery Hero - 4,000
Feb'20 Europe Just Eat Takeaway - 7,600
Jun'20 USA Grubhub JustEat Takeaway - 7,300
Jul'20 USA Postmates Uber Eats - 2,650
Source: Company, Media Reports, JM Financial. Note: The above list includes deals announced but yet to be completed.
We believe the primary reason for this consolidation is that demand over these years was
largely stimulated by exceptionally high levels of marketing and promotional spends (cash-
backs, discounts, referrals, subsidised delivery fees, etc.). Essentially, multi-year constant
funding support was extremely crucial to prolonging the longevity of the aggregators.
Therefore, it is not surprising to see that while external investors cumulatively pumped in
around USD 2.3bn worth of primary funds in the industry (excluding investments from self-
funded companies such as Uber and Ola in their respective food delivery businesses) since
inception, the two companies that have managed to survive the churn have till-date together
cornered ~95% of these funds.
Exhibit 15. Indian online food delivery marketplaces have cumulatively Exhibit 16. … but ~95% of these funds have been cornered by only
raised c. USD 2.3bn primary funds from external investors till-date… two players, Swiggy and Zomato
Yearly funding trends (USD mn) Cumulative funds raised (USD mn) 1,429
1,472
189 213
94 89 102 743
53 66
3
2
1 4 5 12 17 20 24 30
2014
2016
2010
2011
2012
2013
2015
2017
2018
2019
2020 (YTD)
TastyKhana
Jugnoo
Tinyowl
Zomato
Runner
FoodPanda
Others
Swiggy
Scootsy
Source: Tracxn, JM Financial. Note: We have excluded secondary funding. Source: Tracxn, JM Financial. Note: We have excluded secondary funding.

…ensuring that the recipients of the funds focussed on industry

penetration beyond the traditional markets (large cities)
The considerable investments received by Zomato and Swiggy in CY2018 led to exponential
growth in scale as well as volumes of the online food delivery industry. Both Swiggy and
Zomato were able to exponentially grow their operations since then. In fact, between FY18
and FY20, their operations expanded from merely 7-15 cities to more than 500 cities due to
strong capital backing, in addition to significant improvement in cost and time dynamics
while launching in newer cities. During this period, their delivery and restaurant partner
network also grew 8x-10x. The robust expansion in delivery and partner networks in turn
helped these companies substantially augment their order volumes.
Exhibit 17. With a substantial drop in number of days to launch as Exhibit 18. … both Swiggy and Zomato have substantially scaled up
well as initial cost to launch in new cities… their food delivery presence in the last two years
Swiggy: Cost and time taken to launch in a new city FY18 FY19 FY20
550+
USD 25,000 520+
Earlier Now
USD 2,700
90 200+
130+
7 15
Swiggy Zomato
No. of days to launch in a new city Cost to launch in a new city Food delivery services in cities
Source: Prosus, JM Financial Source: Zomato, Prosus, JM Financial
Exhibit 19. Growth in delivery and restaurant partner network for Zomato and Swiggy
FY18 FY19 FY20
2,40,000
2,00,000
1,70,000 1,80,000
1,60,000
1,50,000
1,00,000
85,000
18,000 25,000*
Swiggy Zomato Swiggy Zomato

Delivery - Active Partners Delivery - Active restaurants
Source: Zomato, Prosus/Naspers, JM Financial. * based on media reports - - includes restaurants in India and UAE
To cite an example of exceptional volume growth, we take the example of Swiggy, whose
average daily order volumes in Gurgaon grew more than 7x between May’17 and Aug’19.
Moreover, while it took the company around 3 years to reach daily average order volumes of
5,000 in Gurgaon after the launch of operations, it took just 6-8 months to reach a broadly
similar scale in several lower tier cities (see exhibit 20).

However, the strong zest to grow scale in terms of volumes exponentially resulted in elevated
levels of promotional campaigns for both Zomato and Swiggy. This in turn led to high cost of
customer acquisition, a significant decline in the average order values and substantial cash
burns (EBITDA losses).
Exhibit 20. Swiggy: Time taken to reach similar daily order volumes Exhibit 21. For Swiggy, while the pace of monthly new user additions
for smaller recently-launched cities versus a relatively large city such grew multi-fold after receiving its first investment from Naspers, its
as Gurgaon cost of acquisition broadly remained constant at elevated levels
Source: Prosus Source: Prosus. Note 1: the bars in the chart indicate monthly new user additions and the line graph
indicates cost of per customer acquisition (in USD). Note 2: Swiggy received its first investment from
Naspers in Jun’17.
Exhibit 22. Both Zomato and Swiggy have scaled up their revenues since FY17 on the back of substantial cash burn
FY17 FY18 FY19
25,000
20,000
15,000
10,000
5,000
0
Zomato Swiggy Zomato Swiggy
Revenue (INR mn) EBITDA loss (INR mn)
Source: VCC Edge, JM Financial. Note: Consolidated financials for both the companies

Lower tier cities and cloud kitchens - key to growth dynamics

and sustainable profitability
Scaling up beyond large cities has helped business economics
While we note that the strategy has the challenge of significantly lower average order value Cost of delivery per order is much
compared with Metros/tier-1 cities - surprisingly, the economics of operating in smaller cities cheaper in lower tier cites as
seem to be working out in favour of online food delivery aggregators. This is mainly because labour is comparatively cheap and
cost of delivery per order is much cheaper in lower tier cites (labour is comparatively cheap a few delivery partners use bicycles
and a few delivery partners use bicycles to deliver orders), the average time spent by partners to deliver orders
per delivery is also much lower (the traffic situation is lot better), as well as the benefits of
scale and centralised management.
We believe new user additions and increase in ordering frequency in higher tier cities here-on
would be relatively slower as they have been exposed to online food delivery aggregators for
There exists a long tail of lower tier
many years now while there exists a long tail of lower tier cities where the online food
cities where the online food
aggregators have entered the market only recently. Moreover, when combined, they
aggregators have entered the
together offer a large pool of potential untapped customers who are yet to be on-boarded
market only recently that offer a
on these aggregator platforms. Therefore, we believe lower tier cities will be key to
large pool of untapped customers
incremental growth in volumes for aggregators going forward. Moreover, due to better unit
economics in lower tier cities, their contribution can be critical for the aggregators to achieve
sustainable profits.
Deepinder Goyal, Founder and CEO at Zomato in a blog post in Oct’19 summarised the
company’s experience in lower tier cities, saying -“The response that we have seen from the
so called “Tier 2-4” cities in India has been a pleasant surprise for us.”
Exhibit 23. Tier 3/4 cities account for more than a third of Zomato’s Exhibit 24. Zomato believes that business economics in non-metro
monthly order volumes cities are better than metros despite lower average order value
Metro cities Non-metro cities

Tier 3/4 X Y T T-3
cities, 35%
0.8X
0.5Y
Metros /
Tier-2 cities,
65%
Average order value Cost of delivery Delivery times (mins)

Source: Zomato, JM Financial. Note: Data is as of Oct’19. Source: Zomato, JM Financial. Note: Data is as of Oct’19.

Why are cloud kitchens an attractive value proposition for food delivery
aggregators?
In the immediate aftermath of the lockdown, several media reports indicated that food
delivery aggregators, especially Swiggy, were closing down several of its cloud kitchens due
to reduced business visibility. However, we believe that a few hiccups do not necessarily
mean the end of the road for cloud kitchens. This is because we believe social distancing
norms, offerings at reasonable price points and customer priority on getting food delivered
from high-quality/hygiene focussed kitchens where there is minimal staff requirement would
likely make them even more relevant from online food delivery aggregators’ perspectives to
recover lost volumes.
Before the Covid-19 led nation-wide lockdown in India in Mar’20, cloud kitchens were
Pre-Covid, consumers were
increasingly gaining popularity with end-consumers as well as online food delivery
latching on to the idea of getting
aggregators. While consumers were latching on to the idea of getting standardised/curated
standardised/curated meals
meals delivered at their homes or workspaces at reasonable prices as well as comparatively
delivered at reasonable prices as
less time (than traditional restaurants), food delivery aggregators emboldened by the success well as comparatively less time
of Rebel Foods and Box8, among others, were focussing on rapidly ramping up their own
network of cloud kitchens.
For these aggregators, the benefits of either setting up their own cloud kitchens/partnering
with existing ones include the following: 1) cloud kitchens are easy to set up, scale up and Food delivery aggregators can
operate as they require low funding support, the location does not affect order volumes, charge higher commissions from
licenses are comparatively easy to get and staff requirements are less; 2) food delivery cloud kitchen operators as set-up
aggregators can charge higher commissions from operators due to the associated cost as well as operating costs are
savings and 3) the customer response was overwhelming – cloud kitchens were accounting lower for them
for a sizable chunk of order volumes wherever they were being integrated on the platform of
food delivery companies.
Larry Illg, CEO for Food and Ventures at Prosus – major investor in Swiggy during a
conference call in Nov’19, replying to a question on the potential of cloud kitchens in India -
“The question on cloud kitchens, I think this is very much a local story. And In the case of
India we have been surprised in some ways by the lack of classic restaurants. And the role the
cloud kitchens play for Swiggy is not just introducing food delivery to the Indian consumer
but bringing restaurant experience. And we’ve been surprised and impressed by the payback
of these kitchens. We see a lot of further potential there.”
Exhibit 25. Swiggy estimates its cloud kitchens business accounts for Exhibit 26. Ability to charge higher commissions make cloud kitchens
around 20% of its total deliveries (in places where they are active) a very attractive proposition to online food delivery companies
Cloud 25%
kitchens,
20%
15-20%
Other
restaurants,
80% Other restaurants Cloud kitchen*
Source: Media Reports, JM Financial. Note: As of Nov’19 Source: Media Reports, JM Financial. Note: * indicates with minimum business guarantees

Exhibit 27. Funding trends in cloud kitchens indicate investors were Exhibit 28. Pre-Covid both Zomato and Swiggy were aggressively
increasingly positive on their long-term viability before lockdown adding cloud kitchens beyond metros as well
1200
Funding trends in cloud kitchens (USD mn) Zomato Swiggy
1,000
180 165 1000
160
140 800
663
120
100 600
80 66
400
60
40 28
22 200
20 12 10 50
14
0 0
2014 2015 2016 2017 2018 2019 Cities Cloud Kitchens and kiosks
Source: BCG, JM Financial Source: Media Reports, JM Financial

Investors getting more prudent with funding

Several media reports during mid-late 2019 indicated that both Zomato and Swiggy were
looking to raise large ticket investments from a range of existing and new investors, similar to
rd
what happened in 2018 (the year accounts for more than 2/3 of the total funds raised by
these companies till-date). However, in reality both companies received investments that
were only a fraction of what was being speculated and at valuations that were also much
lower than expected. What this likely means is that while investors might still be open to the
idea of occasional funding support, large-ticket investments at lofty valuations are unlikely
here-on, especially now that the market is a virtual duopoly and the companies are
undergoing a course correction on their rapid growth trajectory even before the impact of
the pandemic was felt.
Exhibit 29. Investments received by Zomato and Swiggy since inception

Period Company Funds raised (USD mn) Valuation (USD mn) Investors
Aug-10 Zomato 1 3 Info Edge
Sep-11 Zomato 3 14 Info Edge
Sep-12 Zomato 3 33 Info Edge
Jan-13 Zomato 10 85 Info Edge
Nov-13 Zomato 37 161 Sequoia, Info Edge
Nov-14 Zomato 60 660 Vy Capital, Info Edge, Sequoia
Feb-15 Swiggy 2 5 Accel, SAIF Partners
Apr-15 Zomato 50 700 Vy Capital, Info Edge, Sequoia
Jun-15 Swiggy 17 52 Norwest Venture Partners, Accel, SAIF Partners, DST Global
Sep-15 Zomato 60 1,000 Temasek, Vy Capital
Jan-16 Swiggy 35 135 SAIF Partners, Accel, Norwest Venture Partners, Harmony Partners, RB Investments, DST Global
May-16 Swiggy 7 NA Norwest Venture Partners, Accel, DST Global
Sep-16 Swiggy 15 205 Bessemer Venture, Accel, SAIF Partners, Norwest, DST Global
Jan-17 Swiggy 5 NA InnoVen Capital (venture Debt)
May-17 Swiggy 80 400 Naspers, Accel, SAIF Partners, Bessemer Venture, Harmony Partners, Norwest
Feb-18 Swiggy 100 740 Naspers, Meituan
Feb-18 Zomato 152 1,100 Ant Financial (+USD 50mn secondary from Info Edge)
Jun-18 Swiggy 210 1,255 DST Global, Naspers, Coatue, Meituan
Oct-18 Zomato 210 2,000 Ant Financial
Dec-18 Swiggy 800 3,140 Naspers, DST, Tencent, Hillhouse, Wellington, Meituan, Coatue (+200mn Secondary sale)
Feb-19 Zomato 40 2,100 Glade Brook Capital
Feb-19 Zomato 62 2,100 Delivery Hero, Shunwei Capital, Saturn Shine
Jan-20 Zomato 50 3,050 Ant Financial
Feb-20 Swiggy 158 3,450 Prosus, Wellington, Meituan, Tencent, Korea Invest., Samsung Venture, ARK Impact , Mirae
Mar-20 Zomato 5 3,250 Pacific Horizon Investment Trust

Source: Tracxn, VCC Edge, JM Financial

Period of high-cash burn for volume growth looks like nearing

its end – but who knows!
Our recent reading of statements from both Zomato and Swiggy indicates that the period of
high cash burn to either acquire new customers or increase the frequency of orders from Going ahead, we expect food
existing customers ultimately to grow scale is either over or nearing its end. This likely means, delivery aggregators to focus on
the focus of both these companies here-on would be to improve unit economics through improving unit economics through
higher average order values & take rates (commissions + delivery costs), lower discounts & higher average order values & take
marketing spends and optimising the delivery costs. This in turn may substantially lower their rates, lower discounts & marketing
volume growth, even if we were to exclude the impact of the Covid-19 crisis, an event that spends and optimising the delivery
we believe has significantly expedited this process. Snippets from some major investors in costs. However, this may lower
Zomato and Swiggy are highlighted below. their volume growth compared to
the recent past.
Sanjeev Bikhchandani, Co-founder & Vice-Chairman at Info Edge - leading investor in Zomato
during a conference call in Nov’19, replying to a question on how burn rates are being
reduced by its investee company - “When you grow very, very fast and you focus totally on
top line growth, very often, you do not keep your eye on cost of growth, right? So number
of cost innovations is creeping. And then when you say okay now time has come to stop the
burn, you start examining the cost and you figure out ways to do the same thing at a lower
cost, for example, they are cutting discounts and they are cutting marketing at the bottom
end on small orders, they are cutting misuse and abuse like people breaking up orders into
two or three to get discounts, more discounts and so on. And just by doing that we have
been able to cut the cost.”
Larry Illg, CEO for Food and Ventures at Prosus – leading investor in Swiggy during a
conference call in Jun’20, replying to a question on how the investee company is moving
towards profitability - “I think even in a pre-COVID environment the Swiggy team was
focussed on cost savings measures including marketing spend with the objective of deploying
it in some of the areas (grocery and dairy) that Bob mentioned.”
Exhibit 30. Zomato’s recent reporting indicates substantial Exhibit 31. …which is likely to be the case for Swiggy as well based
improvement in take rates and contribution margins… on Prosus commentary and media reports
Take rate
22.0%
21.6%
21.5%
21.0%
20.5%
20.1%
20.0%
19.5%
19.0%
FY19 FY20
Source: Zomato, JM Financial. Note: Take Rate = Revenue from delivery business divided by GMV. Source: Zomato, JM Financial
Amazon however, has the ability to disrupt the two incumbents’ paths to
sustainable profitability
While rumours were rife about the potential entry of Amazon in India’s online food delivery
space at least since Jul’19, the company actually launched its services on a trial basis in
May’20, in the midst of the ongoing pandemic crisis. Initially, the company partnered a few
restaurants and cloud kitchens to provide its food delivery services in select locations in
Bengaluru.
Amazon’s entry into the food delivery space could result in heightened competitive intensity,
as Amazon is likely to leverage its Amazon Prime network for its food delivery business. Since

several Prime members would already be using Zomato/Swiggy, they may consider a switch
to the platform with incremental benefits from Prime membership.
However, we note that the exact details of Amazon’s business model are not clearly known
yet (whether it plans to operate only a facilitator model or a last-mile delivery based model).
Moreover, its earlier attempts to penetrate the food delivery space in the US and the UK have
primarily been for its prime users and have not been successful (media report).
Nevertheless, we believe the entry of a cash rich player such as Amazon has the potential to
impact the path to sustainable profitability of both the incumbents over the medium-to-long
term. In fact, media reports in 2019 had indicated that Amazon was on-boarding restaurants
by offering them significantly low commission rates compared with the two incumbents.
Exhibit 32. A screenshot of the newly-launched Amazon food delivery platform
Source: Media Report

Notably, Indian market is far from mature

We note a stark contrast on how global food delivery aggregators performed versus their
Indian counterparts when the impact of the ongoing pandemic was the highest in their
respective underlying markets.
While global food delivery aggregators excelled during the pandemic…

While in the initial few days, the lockdowns and the pandemic fear did take a toll on the Most global online food
businesses of most global food delivery aggregators, they have started reporting a very sharp aggregators have not only
recovery since then. In fact, most aggergators have not only recovered to pre-Covid levels but recovered to pre-Covid levels but
some also reported signficant growth over the 2-3 months that followed the first impact of
some are also reporting strong
the crisis. We believe the reason for such sharp recoveries in the businesses of online food
delivery companies globally were mainly due to the mature nature of the markets and high growth over the 2-3 months that
dependency of customers on out-of-home cooked food. followed the first impact of the
crisis
For example, Meituan Dianping, a leading China-based online food delivery aggregator
reported a loss of just 17% volumes YoY during Jan’-Mar’20, when the impact of the
pandemic would have been the highest. In fact, Alibaba reported that its food delivery-
focussed group company Ele.me reported positive volumes growth in Apr’20.
Similarly, numbers reported by online food delivery companies in the US and Western Europe
indicate that there is a very sharp turnaround/recovery in operations. In fact, in April and May
delivery volumes for these companies grew 28-41% YoY.
Exhibit 33. The pandemic’s impact on China’s second most popular food delivery platform - Meituan Dianping
Meituan Dianping (China) 1QFY19 1QFY20 YoY
Food delivery orders (million) 1,663 1,375 -17.3%
Avg. Order Value (CNY) 45.5 52.0 14.4%
GMV (CNY bn) 75.6 71.50 -5.4%
Commission revenue (CNY bn) 9.92 8.56 -13.7%
Take rates 13.1% 12.0% -115 bps
Source: Meituan Dianping, JM Financial. Note: FY ends in December for Meituan Dianping
Exhibit 34. Online food order deliveries not only recovered sharply from the lows of Mar’20 in the Western markets but also reported
significant increase in volumes in the months of Apr’ & May’20 on a YoY basis
Just Eat Takeaway (Orders in millions) Apr & May'19 Apr & May'20 YoY
United Kingdom 22 29 33%
Germany 12 18 48%
Canada 8 15 97%
The Netherlands 6 9 38%
Rest of World 20 25 24%
Total 68 96 41%
Grub Hub (Orders in millions) Apr & May'19 Apr & May'20 YoY
USA 30 39 28%
Source: Just Eat Takeaway, JM Financial
…their Indian counterparts have lost some order volume

In India too, the crisis had a severe impact on the operations of online food delivery
aggregators in the beginning. In fact, Redseer estimates monthly deivery volumes were down
~80% in the month of Apr’20 compared with January, despite the fact that the government
had included food deliveries under essential services in the initial few days itself that meant
they were exempt from most lockdown-related restrictions. Essentially, the slump in order
volumes was due to a mix of muted demand – customers preferring home cooked/packaged
food as well as supply side challenges – 1) several restaurants were not functioniong due to
zero to low dine-in demand, migration of restaurant workers and working capital crunch and
2) several delivery partners preferring to stay home due to health concerns.
Contrasting to the Western/Chinese markets though, media reports indicate that daily food
delivery volumes for both Swiggy and Zomato are still down by around 40-50%. The
aggregators are now anticipating a gradual recovery that would be spread over the next

several months, instead of a sharp rebound. For example, Zomato in its recently-published
annual report (link to our report) has indicated that it will take another 3-6 months to
completely recover to pre-Covid levels.
We believe the reason for this contrast is that the majority of Indian customers, despite the Media reports indicate that food
high volume growths reported by the food aggregators in recent periods, are still in delivery volumes for both Zomato
experimention mode with food deliveries. While high promotional intensity might have made and Swiggy are still down by 40-
it easier for them to try out new restaurants and/or recipies, the fact that most customers
50% indicating the recovery for
were able to swiftly switch back to traditional home-cooked meals during the pandemic likely
Indian aggregators will be more
indicates that the online food delivery market in India is far from mature.
prolonged compared to their
To partially recover lost volumes, both Zomato and Swiggy attempted to sustain operations global counterparts
by offering grocery deliveries during the lockdown period. However, we believe such
attempts were/are unlikely to be successful in the near term as both the models are quite
different and need separate management bandwidth. Therefore, not surprisingly, Zomato
had shut down its grocery delivery business by mid-June.
Exhibit 35. As of June, at least 50% of Swiggy / Zomato’s restaurant Exhibit 36. In the initial phase of Covid-19 crisis, avg. daily online
partners for delivery services were yet to resume services food delivery orders dropped ~80% for the two leading players
Pre-Covid Post-Covid 2,500

X -80%
Y
2,000
1,500
0.5Y
1,000
0.25-0.4X
500
0
Swiggy Zomato Jan'20 Feb'20 Mar'20 April'20
Source: Media Reports, JM Financial. Note: Assuming X and Y to be the number of restaurant partners Source: Redseer, JM Financial
associated with Swiggy and Zomato in the pre-Covid lockdown period.

Sizing up the online food delivery market for aggregators!

Based on a few publicly available numbers and our interactions with industry experts, we We estimate the online food
estimate that the online food delivery aggregators in India would have delivered a combined delivery market for aggregators
1 billion orders in FY20, with an aggregate order size worth ~INR 263. This leads us to a total was around USD 3.6bn in FY20,
market size of around USD 3.6bn in GMV terms for FY20. However, we believe there is a very with around 1 billion orders
high possibility that the overall market would shrink by ~18% in FY21 due to the severe delivered during the fiscal year
impact of the pandemic on order volume growth.
Thereafter, we believe that annual food order volumes can reach 1.75bn in FY25, posting a
CAGR of 27% over the next four years, with the underlying assumption that investor
pressure would ensure that all market players focus on achieving profitable growth, rather
than just reckless volume expansion through high levels of promotional intensity. Further, we
forecast that average order size during this period would grow to around INR 370 from
around INR 265 in FY20, on the back of increased market maturity and the aggregators
themselves shifting focus to large ticket size orders that could help improve margins due to
mix benefits. Accordingly, we estimate that the online food delivery market is poised to post
a CAGR of 19% over the next five years to reach USD 8.6bn.
Exhibit 37. We estimate the online food delivery market for aggregators to grow from ~USD
3.6bn in FY20 to USD 8.6bn (19% CAGR) by FY25
9 8.6
GMV (USD bn)
8 7.3
7
6.1
6
4.8
5
4 3.6
2.9
3
0
FY20E FY21F FY22F FY23F FY24F FY25F
Newly launched cities and repeat orders from existing customers to drive
order volumes
Both Swiggy and Zomato have seen a substantial increase in their transacting user base over
the last few years on the back of rapid expansion in cities beyond Tier 1. In fact, by doing so, Past experience of online food
we believe these companies have successfully enlarged their potential customer base; this aggregators indicates that
could have a long-term positive impact on the market. Moreover, their past experience ordering frequency for existing
indicates that ordering frequency for existing customers tends to increase with passage of customers tends to increase with
time. passage of time
Assuming normalcy returns after the on-going pandemic over the next 3-6 months, we
believe, incremental order volumes for food delivery aggregators would mostly come from
new customers in cities where operations were launched over the last 2-3 years as well as an
increase in ordering frequency of existing customers.

Exhibit 38. Avg. monthly transacting users and their ordering Exhibit 39. Monthly ordering frequency for existing customers of
frequency for Zomato Swiggy
1HFY19 1HFY20
12
10 11.2
4
3.6 3.6
2 3.1
0
Avg. monthly transacting users Avg. user ordering frquency (per
(million) month)
Source: Zomato, JM Financial Source: Prosus
We estimate average order value to grow to INR 369 in FY25

The average order values for food delivery aggregators had substantially declined over the
last two-three years mainly due to the following: 1) The substantial increase in order volume
share of lower tier cities where average order sizes can be substantially lower than higher tier
cities (refer to exhibit 24). 2) Growing popularity of standardised/curated single-serve meals
from cloud kitchens that are reasonably priced (in some cases as low as INR 99). 3) Constant
availability of promotional offers even for small ticket orders that may have incentivised
customers to distribute a single large ticket order into several small ticket orders.
A few months prior to the onset of Covid-19, media reports had started indicating that food
delivery aggregators were increasingly focusing on improving their average order values
through lower promotions in their bid to support profitability. However, the onset of the
pandemic likely expedited this process as food delivery aggregators further reduced their
promotions, several cloud kitchens shut down their operations citing poor demand visibility
and lockdown restrictions on movement leading to several family members staying together
and placing large ticket orders.
After the pandemic, we expect the online food delivery aggregators to not revert to their old
practices of focusing on order volumes at the expense of average order values that could lead
to near-term sustainability of average ticket sizes. Over the medium to long term, we believe
market maturity would ensure that average order values improve in line with inflation.
Exhibit 40. While avg. order value (before discounts) for online food Exhibit 41. …we estimate an annual average order value increase
delivery companies declined by >25% over the last two years… of 7% over FY20-FY25F
370 380 390
Average Order Value (INR)
369
370
350
330
310
290
263
270
260
250
4QFY17 2QCY18 4QFY18 2QFY19 4QFY19 2QFY20
FY20E FY21F FY22F FY23F FY24F FY25F
Source: Redseer, JM Financial. Note: Source: JM Financial

Critical factors for long-term sustainability

In general, we believe the most widely discussed metric for all e-commerce companies is
GMV (when they are in growth stage). The discussion most often turns to ensuring
sustainable revenue growth and profitability only when investors believe that the company
has grown to a decent size and scale and burning cash is no longer a viable option.
The three main components that affect the revenues of online food delivery aggregators,
apart from the GMV, are per order commissions and advertising and premium positioning
fees, both of which are earned from partner restaurants in addition to the delivery fees
collected from customers on a per order basis. However, we do note that the underlying
definition of each of these components may grossly vary from one company to another or
across geographies or different reporting standards.
Exhibit 42. Revenue accretion
Commission from
restaurants
Gross order Delivery fees charged to

customers Revenue
value (GOV)
Advertising, premium
positioning fees etc.
In terms of profitability, the most widely discussed metric for online food delivery aggregators
during any company’s growth stage is contribution margin, which simply means the profit
earned after deducting all variable expenses such as discounts, marketing spends and delivery
costs. Lastly, EBITDA is calculated by deducting the company’s fixed costs (such as employee
expenses) and other overhead costs.
Exhibit 43. Contribution margin and EBITDA recognition
Discounts
Other variable costs Contribution Fixed Costs

Revenue (employee salaries, EBITDA
(marketing, etc.) Margin
overheads, etc.)
Delivery Costs
To further illustrate the importance of each of these components, we take the example of
Zomato’s reported numbers in 1QFY21 and our understanding of how each of these
components is likely to behave for the industry as a whole over the near-to-medium term.

Exhibit 44. Likely factors that would enable online food delivery companies to turn profitable in the near term
Zomato: 1QFY21 JMFe for industry Comment
GMV (INR) ~350 335-350 Discounts by restaurants/delivery company are not excluded
Restaurant take rate 17-18% 17-18% Very little scope for improvement in this number here-on
With lower focus on volumes, avg. delivery fee per order will likely
Delivery fees (INR) 20-25 30-35
increase
Revenue (INR) 83.5 90-95
Delivery cost (INR) 41 30-35 Multiple pick-up and multiple drops model can lead to lower costs
Discount + Other variable expenses Discounts ensure repeat orders from customers, so expect companies
15 30-35
(INR) to continue to offer some discounts
Contribution margin (INR) 27.5 15-25
Source: Zomato, JM Financial

How the two incumbents stack up

Following the permanent shutdown of the operations of FoodPanda by Ola in May’19 and
the merger of Uber Eats with Zomato in Jan’20, the Indian online food aggregator industry
has now turned into a virtual duopoly between Zomato and Swiggy. In fact, both these
companies broadly match each other in terms of operational scale and growth trends. In this
section, we try to compare these two companies on the basis of publicly available data.
According to Prosus, the combined volumes of Zomato and Uber Eats marginally exceeded
those of Swiggy in Sep’19. Further, in FY20, both companies claimed to have more than
doubled their GMV as well as revenues on the back of expansion of operations in newer
cities, growing repeat orders and high promotional campaigns in 1HFY20. Here, we note that
while Zomato has claimed market leadership in GMV terms (Zomato AR20) following its
merger with Uber Eats but Swiggy claims to lead the market in terms of revenue share (media
report).
Exhibit 45. Swiggy was marginally behind Zomato + Uber Eats in Exhibit 46. GMV and Revenue growth for market leaders in FY20
terms of orders per day in Sep’19
182%
Swiggy Zomato
Orders per day
125%
108%
105%
GMV - YoY Group Revenue - YoY

Swiggy Zomato + Uber Eats Source: Prosus, Zomato, JM Financial
Source: Prosus, JM Financial
Exhibit 47. One of the often cited reasons for Zomato’s acquisition of Uber Eats is that it
wanted to grow the share of its own volumes from South India
North India South India
Zomato Uber Eats India Swiggy

Source: Media report,, JM Financial

10 August 2020 India | Internet | Ratings Downgrade
Info Edge | HOLD

Stretched valuations; downgrade to HOLD
INFOE has reported a 42% YoY billings decline in its standalone business over YTD-mid Jul’20 Prince Poddar
prince.poddar@jmfl.com | Tel: (91 22) 62241879
in its latest update on the Covid-19 crisis. While monthly billing growth has improved in
Swapnil Potdukhe
Naukri India (excludes Quadrangle, IIMjobs, etc.) and 99acres, complete recovery would need swapnil.potdukhe@jmfl.com | Tel: (91 22) 62241876
a few more months. However, Jeevansathi continued to report YoY growth in billings. The
company has also announced completion of its QIP to raise total funds worth INR 18.75bn.
These funds are likely to be deployed towards M&A opportunities arising from the current
Covid-19 crisis. We factor in these events in our model and raise our EPS estimates by 4-5%
over FY21-22 (primarily due to a substantial increase in other income due to doubling of cash
in balance sheet). We also revisit our revenue estimates for Zomato following its recently
released annual report for FY20 and commentary on Covid-19’s impact. We factor these to Recommendation and Price Target
derive an SOTP-based FV of INR 2,870 (previously INR 2,600). Lastly, while we continue to Current Reco. HOLD
expect INFOE to be a long-term value creator, we anticipate near-term challenges to keep its Previous Reco. BUY
Current Price Target (12M) 2,870
performance in check. Even if there is any announcement of an M&A with potential to create
Upside/(Downside) -13.4%
synergies with its existing businesses, we believe there is no room for upside in the stock, Previous Price Target 2,600
following a run-up of 47% since our last upgrade on 9Apr’20 (Nifty 50 was up 28% during Change 10.4%
the same period). We therefore downgrade our rating to HOLD (from BUY).
Key Data – INFOE IN
 Standalone billings down 42% YoY till YTD-mid Jul’20: While Naukri and 99acres were Current Market Price INR3,313
down 43% and 69% YoY till YTD-mid Jul’20 due to Covid-19’s impact, Jeevansathi (B2C Market cap (bn) INR405.9/US$5.4
business) reported 15% YoY growth. Overall, standalone billings were down 42% YoY. Free Float 49%
Our analysis indicates that both Naukri and 99acres are going through a gradual MoM Shares in issue (mn) 128.6
Diluted share (mn) 127.8
recovery, with the latter likely to take more time to recover on account of stress in the
3-mon avg daily val (mn) INR1,360.4/US$18.2
underlying industry. We reduce our standalone revenue estimates over FY21/22 by 3-4% 52-week range 3,441/1,580
to factor in the latest billing updates from the company. Sensex/Nifty 38,041/11,214
INR/US$ 74.9
 Zomato’s path to profitability expedited by Covid-19 crisis: While Zomato has consistently
been working on improving its profitability metrics over the past 12-15 months, the Price Performance
Covid-19 crisis has further expedited it. Monthly cash burn (EBITDA loss) was just USD % 1M 6M 12M
Absolute 15.7 7.6 50.1
1.5mn in Jun’20 versus ~USD 45mn/20mn in Mar’19/Oct’19. However, we believe the
Relative* 11.3 15.9 48.3
pre-Covid improvement was partly led by a trade-off between order volumes and lower * To the BSE Sensex
A&Ps + higher average order values (especially in 2HFY20). While, the pandemic has led
to lower order volumes, we believe average order values and net take-rates have risen
substantially. We factor these changes to forecast ~33% revenue CAGR over FY20-23E.
 Stretched valuations, Downgrade to HOLD: While we like INFOE’s strong fundamentals

and superior market positioning, we anticipate near-term challenges due to Covid-19,
primarily for jobs and real estate. We factor them and the QIP fund-raise in our model,
roll over the standalone DCF (use revised WACC of 10% versus 10.6% earlier; terminal
growth of 5%) and value investee companies on their respective last-announced funding
rounds to arrive at a SoTP-based FV of INR 2,870 (versus INR 2,600 earlier). Further, we
downgrade the stock to HOLD (from BUY) due to stretched valuations and lack of any
immediate upside triggers, which might weigh on the stock price in the near term.
Financial Summary (INR mn)

Y/E March FY19A FY20A FY21E FY22E FY23E
Net Sales 10,983 12,727 11,810 14,146 16,419
Sales Growth (%) 20.0 15.9 -7.2 19.8 16.1 JM Financial Research is also available on:
EBITDA 3,413 4,027 4,269 5,338 6,460 Bloomberg - JMFR <GO>,
EBITDA Margin (%) 31.1 31.6 36.1 37.7 39.3
Adjusted Net Profit 2,817 2,057 4,294 5,241 6,278
Thomson Publisher & Reuters,
Diluted EPS (INR) 22.8 16.6 33.6 40.3 48.3 S&P Capital IQ, FactSet and Visible Alpha
Diluted EPS Growth (%) 53.9 -27.3 102.4 19.9 19.8
ROIC (%) 0.0 0.0 0.0 0.0 0.0 Please see Appendix I at the end of this
ROE (%) 12.7 8.6 12.1 10.8 11.9
report for Important Disclosures and
P/E (x) 145.4 200.0 98.8 82.4 68.8
P/B (x) 17.6 16.9 9.1 8.6 7.9 Disclaimers and Research Analyst
EV/EBITDA (x) 120.5 102.8 91.8 72.5 59.1 Certification.
Dividend Yield (%) 0.2 0.2 0.2 0.3 0.3
Source: Company data, JM Financial. Note: Valuations as of 07/Aug/2020
JM Financial Institutional Securities Limited

Info Edge 10 August 2020
Exhibit 1. INFOE: Standalone billings were down ~42% YTD-mid Jul’20

All numbers are in INR mn except percentage YTD-mid Jul'20 YTD-mid Jul'19 YoY
Recruitment 1,530 2,662 -42.5%
99Acres 163 518 -68.5%
Jeevansathi 269 234 15.0%
Shiksha 120 171 -29.8%
Info Edge - Standalone 2,084 3,586 -41.9%
Source: Company, JM Financial
Exhibit 2. While billings growth trends are improving each passing month across all major
businesses, complete recovery is likely to take some more time in recruitment and 99acres
Apr'20 May'20 Jun'20 Mid Jul'20
24%
18%
11% 11%
-30% -32%
-52%
-54% -57%
-90% -85%
Naukri India* 99acres Jeevansathi

Source: Company, JM Financial. Note: Naukri India excludes other businesses like Quadrangle, IIMjobs, etc.
Exhibit 3. What has changed in our forecasts and assumptions?

Old New Change
FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
Standalone revenue (INR mn) 12,320 14,561 NA 11,810 14,146 16,419 -4.1% -2.8% NA
Revenue growth rate (YoY) -3.2% 18.2% NA -7.2% 19.8% 16.1% -401bp 159bp NA
EBITDA margin 37.0% 37.4% NA 36.1% 37.7% 39.3% -82bp 35bp NA
Adj. PAT (INR mn) 4,015 4,760 NA 4,294 5,241 6,278 6.9% 10.1% NA
Adj. EPS 32.4 38.4 NA 33.6 40.3 48.3 3.7% 4.9% NA
Exhibit 1. How we differ from consensus

Consensus JMFe Difference
(INR mn) FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
Revenue 12,689 14,723 15,979 11,810 14,146 16,419 -6.9% -3.9% 2.7%
EBITDA 3,986 5,059 6,206 4,269 5,338 6,460 7.1% 5.5% 4.1%
EBITDA margin 31.4% 34.4% 38.8% 36.1% 37.7% 39.3% 473bp 337bp 51bp
PAT 3,382 4,190 5,273 4,294 5,241 6,278 26.9% 25.1% 19.1%
EPS (INR) 27.9 34.8 45.9 33.6 40.3 48.3 20.5% 15.9% 5.0%
Source: JM Financial, Bloomberg

Downgrade to HOLD; change TP to INR 2,870

Exhibit 2. Valuation summary
Business Per share value % of valuation Comments
Recruitment (Naukri) 1,292 45.0% DCF Valuation
99acres 381 13.3% DCF Valuation
Jeevansathi 280 9.7% DCF Valuation
Investee Companies
Zomato 479 16.7% Based on multiple of last funding round* (Jan. 2020)
Policybazaar 134 4.7% Based on multiple of latest secondary round (Nov. 2019)
Happily Unmarried 7 0.3% Based on proposed funding by Wipro Consumer (Nov. 2017)
Others^ 26 0.9% Book value
Cash and cash equivalents 268 9.3%
Total 2,870 100%
Source: JM Financial. ^ includes Unnati Online, NoPaperForms, Univariety, Gramophone, Medcords, Printo, Shop Kirana, Bizcrum, Greytip, Adda247, Teal, LQ Global, Shipsy, Coding Nija, Qyuki, Dotpe, Bulbul.*
indicates adjusted for Covid-19 impact on1-Yr forward revenues.
Key Risks
 Key upside risks to our price target are: (1) better-than expected revenue growth in
Naukri on the back of technology investments; (2) higher-than-expected valuations of
investee companies; and (3) any accretive acquisition, not currently priced in.
 Key downside risks are: (1) guided step-up in ad spends in different businesses, affecting
margins; (2) risk to Naukri.com from lower hiring in some sectors, especially IT; (3)
investments in start-ups not giving expected returns, leading to a stake sale at a discount;
and (4) weak macros, leading to further postponement of hiring by companies + subdued
demand in residential real estate due to Covid-19.
Exhibit 3. INFOE currently trades at 18% premium to its 3-year mean PER
INFOE - 12 month forward PER band INFOE – PER Valuation chart
4,000 130
3,500 120
110
3,000
100
2,500
90
2,000 80
1,500 70
60
1,000
50
500
40
Nov-17
Nov-18
Nov-19
Aug-17
Feb-18
May-18
Aug-18
Feb-19
May-19
Aug-19
Feb-20
May-20
Aug-20
0
Price 40X 60X 80X 100X PER 3 Yr median +1 SD -1 SD

Exhibit 4. Global internet peer comparison

Rev EBITDA EPS
MCap / Revenue (x) CAGR EV / EBITDA (x) CAGR P / E (x) CAGR
MCap EV
Company CY20E CY21E CY22E 20-22E CY20E CY21E CY22E 20-22E CY20E CY21E CY22E 20-22E
(US$bn) (US$bn)
Recruitment
Recruit Holdings 57.4 57.4 2.8x 2.6x 2.4x 8.2% 26.0x 19.2x 16.4x 26.0% 45.2x 34.3x 27.7x 27.9%
Axel Springer 8.1 10.7 2.1x 2.0x nm nm 14.1x 12.9x nm nm 30.0x 26.4x nm nm
Seek 5.4 6.6 5.6x 4.3x 2.6x 47.1% 23.4x 18.9x 11.8x 41.0% 55.6x 44.3x 30.7x 34.6%
51Job 4.6 3.1 5.5x 4.9x nm nm 16.2x 14.6x 13.2x 10.8% 26.0x 20.7x 18.1x 20.0%
Hays 2.6 2.9 0.5x 0.4x nm nm nm 13.0x 10.2x nm nm 25.9x 14.6x nm
En-Japan 1.4 1.1 3.2x 2.8x 2.5x 12.6% 14.7x 11.8x 9.2x 26.0% 28.8x 23.5x 18.6x 24.7%
Average 3.3x 2.8x 2.5x 22.7% 18.9x 15.1x 12.2x 26.0% 37.1x 29.2x 21.9x 26.8%
Real Estate
REA Group 10.7 10.8 14.5x 12.0x 9.6x 22.9% 25.5x 22.4x 18.3x 18.1% 48.2x 30.0x 25.6x 37.1%
Zillow Group 18.1 16.8 5.6x 3.6x 2.5x 49.6% nm nm 57.7x nm nm nm nm nm
Rightmove 7.2 7.1 28.0x 19.5x 18.2x 24.1% 41.9x 25.9x 24.1x 31.9% 53.9x 32.8x 29.7x 34.6%
Axel Springer 8.1 10.7 2.1x 2.0x nm nm 14.1x 12.9x nm nm 30.0x 26.4x nm nm
Scout24 9.5 7.3 22.5x 20.0x 17.8x 12.2% 30.8x 25.3x 21.8x 18.9% 68.3x 49.0x 40.7x 29.6%
Domain Holdings 1.5 1.6 6.0x 5.0x 4.2x 19.7% 24.9x 19.5x 12.9x 38.9% nm 52.1x 28.5x nm
Matrimony/Dating
Match Group 30.0 33.4 12.9x 10.9x 9.6x 15.6% 39.2x 31.2x 26.1x 22.4% 69.9x 45.9x 37.4x 36.8%
Momo Inc. 4.1 2.7 1.1x 1.0x 0.9x 12.9% 4.9x 3.8x 3.5x 18.6% 8.7x 6.7x 6.1x 19.8%
Matrimony 0.2 0.2 4.2x 3.1x nm nm 18.0x 13.3x 9.1x 40.3% 40.6x 23.3x 15.3x 62.8%
Food Delivery
Meituan-Dianping 168.7 161.5 10.1x 7.0x 5.3x 37.7% nm 55.1x 35.1x nm 75.9x 35.6x nm nm
Delivery Hero 23.6 23.0 7.4x 4.6x 3.3x 48.9% nm nm nm nm nm nm nm nm
TakeAway 17.0 17.3 7.1x 5.0x 4.5x 24.8% 67.4x 45.4x 27.8x 55.8% nm 66.7x 49.2x nm
Grubhub 6.9 7.0 4.2x 3.6x 3.2x 14.6% nm 48.3x 33.6x nm nm nm nm nm
YELP 1.6 1.3 1.9x 1.7x 1.6x 10.5% 18.4x 8.8x 6.6x 66.8% 46.8x 19.5x 16.9x 66.5%
Financial Services
MoneySuperMarket 2.2 2.1 4.7x 4.3x 4.0x 7.5% 14.6x 12.4x 11.2x 14.0% 22.3x 18.2x 16.3x 17.0%
Fanhua 1.1 0.9 9.6x nm nm nm 61.3x 9.5x 8.4x 169.6% 18.5x 15.6x 16.3x 6.6%
EverQuote 1.2 1.1 3.5x 2.8x 2.4x 19.8% 65.8x 44.8x 28.7x 51.4% nm nm nm nm
Goco Group 0.6 0.7 3.0x 2.7x 2.4x 10.2% 16.1x 12.5x 10.1x 26.3% 25.2x 18.1x 13.6x 35.9%
Source: Bloomberg, JM Financial. Valuations as of 07/Aug/2020.

Financial Tables (Standalone)

Income Statement (INR mn) Balance Sheet (INR mn)
Y/E March FY19A FY20A FY21E FY22E FY23E Y/E March FY19A FY20A FY21E FY22E FY23E
Net Sales 10,983 12,727 11,810 14,146 16,419 Shareholders’ Fund 23,239 24,317 46,426 50,258 54,970
Sales Growth 20.0% 15.9% -7.2% 19.8% 16.1% Share Capital 1,220 1,223 1,283 1,283 1,283
Other Operating Income 0 0 0 0 0 Reserves & Surplus 22,019 23,094 45,143 48,975 53,687
Total Revenue 10,983 12,727 11,810 14,146 16,419 Preference Share Capital 0 0 0 0 0
Cost of Goods Sold/Op. Exp 4,586 5,396 5,254 5,441 5,903 Minority Interest 0 0 0 0 0
Personnel Cost 0 0 0 0 0 Total Loans 4 2 2 2 2
Other Expenses 2,983 3,304 2,287 3,367 4,055 Def. Tax Liab. / Assets (-) -416 -335 -335 -335 -335
EBITDA 3,413 4,027 4,269 5,338 6,460 Total - Equity & Liab. 22,827 23,984 46,094 49,926 54,638
EBITDA Margin 31.1% 31.6% 36.1% 37.7% 39.3% Net Fixed Assets 549 1,325 1,181 1,286 1,368
EBITDA Growth 14.8% 18.0% 6.0% 25.1% 21.0% Gross Fixed Assets 1,381 2,519 2,789 3,361 3,952
Depn. & Amort. 204 414 413 467 509 Intangible Assets 0 0 0 0 0
EBIT 3,210 3,614 3,856 4,871 5,951 Less: Depn. & Amort. 832 1,195 1,608 2,075 2,584
Other Income 777 -424 1,794 2,025 2,309 Capital WIP 0 0 0 0 0
Finance Cost 0 0 0 0 0 Investments 10,333 14,672 14,672 14,672 14,672
PBT before Excep. & Forex 3,986 3,190 5,650 6,896 8,260 Current Assets 18,070 14,212 36,211 41,009 46,682
Excep. & Forex Inc./Loss(-) 0 0 0 0 0 Inventories 0 0 0 0 0
PBT 3,986 3,190 5,650 6,896 8,260 Sundry Debtors 60 70 65 93 103
Taxes 1,169 1,133 1,356 1,655 1,982 Cash & Bank Balances 15,320 12,798 34,814 39,552 45,183
Extraordinary Inc./Loss(-) 0 0 0 0 0 Loans & Advances 0 0 0 0 0
Assoc. Profit/Min. Int.(-) 0 0 0 0 0 Other Current Assets 2,690 1,345 1,332 1,365 1,397
Reported Net Profit 2,817 2,057 4,294 5,241 6,278 Current Liab. & Prov. 6,125 6,225 5,970 7,042 8,085
Adjusted Net Profit 2,817 2,057 4,294 5,241 6,278 Current Liabilities 0 0 0 0 0
Net Margin 25.7% 16.2% 36.4% 37.0% 38.2% Provisions & Others 6,125 6,225 5,970 7,042 8,085
Diluted Share Cap. (mn) 123.5 123.9 127.8 130.1 130.1 Net Current Assets 11,945 7,988 30,241 33,968 38,597
Diluted EPS (INR) 22.8 16.6 33.6 40.3 48.3 Total – Assets 22,827 23,984 46,094 49,926 54,638
Diluted EPS Growth 53.9% -27.3% 102.4% 19.9% 19.8% Source: Company, JM Financial
Total Dividend + Tax 891 895 923 1,409 1,566
Dividend Per Share (INR) 6.0 6.0 6.0 9.0 10.0
Cash Flow Statement (INR mn)

Dupont Analysis
Profit before Tax 4,320 4,423 5,650 6,896 8,260
Net Margin 25.7% 16.2% 36.4% 37.0% 38.2%
Depn. & Amort. 192 434 413 467 509
Asset Turnover (x) 0.5 0.5 0.3 0.3 0.3
Net Interest Exp. / Inc. (-) -986 -734 64 64 64
Leverage Factor (x) 1.0 1.0 1.0 1.0 1.0
Inc (-) / Dec in WCap. 860 -201 -237 1,011 1,001
Others 39 212 -1,850 -2,080 -2,363 RoE 12.7% 8.6% 12.1% 10.8% 11.9%
Taxes Paid -1,469 -1,112 -1,330 -1,624 -1,945

Operating Cash Flow 2,956 3,022 2,709 4,735 5,526 Key Ratios
Capex -262 -240 -269 -572 -591 Y/E March FY19A FY20A FY21E FY22E FY23E
Free Cash Flow 2,694 2,781 2,440 4,163 4,935 BV/Share (INR) 188.2 196.2 363.2 386.3 422.5
Inc (-) / Dec in Investments 8,163 907 0 0 0 ROIC 0.0% 0.0% 0.0% 0.0% 0.0%
Others -10,134 1,303 0 0 0 ROE 12.7% 8.6% 12.1% 10.8% 11.9%
Investing Cash Flow -2,233 1,970 -269 -572 -591 Net Debt/Equity (x) -0.7 -0.5 -0.7 -0.8 -0.8
Inc / Dec (-) in Capital 27 3 18,750 0 0 P/E (x) 145.4 200.0 98.8 82.4 68.8
Dividend + Tax thereon -808 -1,176 0 0 0 P/B (x) 17.6 16.9 9.1 8.6 7.9
Inc / Dec (-) in Loans 1 -2 0 0 0 EV/EBITDA (x) 120.5 102.8 91.8 72.5 59.1
Others -1 -244 0 0 0 EV/Sales (x) 37.5 32.5 33.2 27.4 23.2
Financing Cash Flow -781 -1,420 18,750 0 0 Debtor days 2 2 2 2 2
Inc / Dec (-) in Cash -57 3,572 21,190 4,163 4,935 Inventory days 0 0 0 0 0
Opening Cash Balance 14,494 15,320 12,798 34,814 39,552 Creditor days 0 0 0 0 0
Closing Cash Balance 14,437 18,891 33,987 38,977 44,487 Source: Company, JM Financial

History of Earnings Estimate and Target Price Recommendation History

Date Recommendation Target Price % Chg.
27-Nov-17 Buy 1,380
2-Feb-18 Buy 1,400 1.4
27-Jun-18 Buy 1,420 1.4
24-Jul-18 Buy 1,430 0.7
29-Jan-19 Buy 1,630 14.0
24-Jun-19 Buy 2,500 53.4
13-Aug-19 Buy 2,500 0.0
27-Aug-19 Buy 2,500 0.0
23-Sep-19 Buy 2,600 4.0
3-Oct-19 Buy 2,600 0.0
9-Oct-19 Buy 2,540 -2.3
12-Nov-19 Buy 2,500 -1.6
8-Jan-20 Buy 2,600 4.0
13-Feb-20 Hold 2,730 5.0
9-Apr-20 Buy 2,600 -4.8
3-May-20 Buy 2,600 0.0
4-Jun-20 Buy 2,600 0.0

APPENDIX I
JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd., National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst – INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: jmfinancial.research@jmfl.com | www.jmfl.com
Compliance Officer: Mr. Sunny Shah | Tel: +91 22 6630 3383 | Email: sunny.shah@jmfl.com
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 15%. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%
Research Analyst(s) Certification
The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.
Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having trading
memberships of the BSE Ltd. (BSE), National Stock Exchange of India Ltd. (NSE) and Metropolitan Stock Exchange of India Ltd. (MSEI). No material disciplinary
action has been taken by SEBI against JM Financial Institutional Securities in the past two financial years which may impact the investment decision making of the
investor.
JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of managing
offerings of securities, corporate finance, investment banking, mergers & acquisitions, broking, financing or any other advisory services to the company(ies)
covered herein. JM Financial Institutional Securities and/or its associates might have received during the past twelve months or may receive compensation from
the company(ies) mentioned in this report for rendering any of the above services.
JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell
the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) covered under this report or (c) act as an advisor or lender/borrower to,
or may have any financial interest in, such company(ies) or (d) considering the nature of business/activities that JM Financial Institutional Securities is engaged in,
it may have potential conflict of interest at the time of publication of this report on the subject company(ies).
Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.
The Research Analyst(s) principally responsible for the preparation of this research report and members of their household are prohibited from buying or selling
debt or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this report.
The Research Analyst(s) principally responsible for the preparation of this research report or their relatives (as defined under SEBI (Research Analysts) Regulations,
2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the company(ies) covered
under this report, or from any third party, in connection with this report or (c) do not have any other material conflict of interest at the time of publication of this
report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies) covered under this report.
While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional Securities may
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This
report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.

The investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire risk of
any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves the right to
make modifications and alterations to this statement as they may deem fit from time to time.
This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any transaction.
This report is not directed or intended for distribution to, or use by any person or entity who is a citizen or resident of or located in any locality, state, country or
other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject JM Financial Institutional
Securities and/or its affiliated company(ies) to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be
eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this report may come, are required to inform themselves of
and to observe such restrictions.
Persons who receive this report from JM Financial Singapore Pte Ltd may contact Mr. Ruchir Jhunjhunwala (ruchir.jhunjhunwala@jmfl.com) on +65 6422 1888 in
respect of any matters arising from, or in connection with, this report.
Additional disclosure only for U.S. persons: JM Financial Institutional Securities has entered into an agreement with JM Financial Securities, Inc. ("JM Financial
Securities"), a U.S. registered broker-dealer and member of the Financial Industry Regulatory Authority ("FINRA") in order to conduct certain business in the
United States in reliance on the exemption from U.S. broker-dealer registration provided by Rule 15a-6, promulgated under the U.S. Securities Exchange Act of
1934 (the "Exchange Act"), as amended, and as interpreted by the staff of the U.S. Securities and Exchange Commission ("SEC") (together "Rule 15a-6").
This research report is distributed in the United States by JM Financial Securities in compliance with Rule 15a-6, and as a "third party research report" for
purposes of FINRA Rule 2241. In compliance with Rule 15a-6(a)(3) this research report is distributed only to "major U.S. institutional investors" as defined in Rule
15a-6 and is not intended for use by any person or entity that is not a major U.S. institutional investor. If you have received a copy of this research report and are
not a major U.S. institutional investor, you are instructed not to read, rely on, or reproduce the contents hereof, and to destroy this research or return it to JM
Financial Institutional Securities or to JM Financial Securities.
This research report is a product of JM Financial Institutional Securities, which is the employer of the research analyst(s) solely responsible for its content. The
research analyst(s) preparing this research report is/are resident outside the United States and are not associated persons or employees of any U.S. registered
broker-dealer. Therefore, the analyst(s) are not subject to supervision by a U.S. broker-dealer, or otherwise required to satisfy the regulatory licensing
requirements of FINRA and may not be subject to the Rule 2241 restrictions on communications with a subject company, public appearances and trading
securities held by a research analyst account.
JM Financial Institutional Securities only accepts orders from major U.S. institutional investors. Pursuant to its agreement with JM Financial Institutional Securities,
JM Financial Securities effects the transactions for major U.S. institutional investors. Major U.S. institutional investors may place orders with JM Financial
Institutional Securities directly, or through JM Financial Securities, in the securities discussed in this research report.
Additional disclosure only for U.K. persons: Neither JM Financial Institutional Securities nor any of its affiliates is authorised in the United Kingdom (U.K.) by the
Financial Conduct Authority. As a result, this report is for distribution only to persons who (i) have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii)
are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are outside
the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000) in connection with the matters to which this report relates may otherwise lawfully be communicated or caused to be
communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant persons and must not be acted on or
relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will
be engaged in only with relevant persons.
Additional disclosure only for Canadian persons: This report is not, and under no circumstances is to be construed as, an advertisement or a public offering of the
securities described herein in Canada or any province or territory thereof. Under no circumstances is this report to be construed as an offer to sell securities or as
a solicitation of an offer to buy securities in any jurisdiction of Canada. Any offer or sale of the securities described herein in Canada will be made only under an
exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable
securities laws or, alternatively, pursuant to an exemption from the registration requirement in the relevant province or territory of Canada in which such offer or
sale is made. This report is not, and under no circumstances is it to be construed as, a prospectus or an offering memorandum. No securities commission or
similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the merits of the securities
described herein and any representation to the contrary is an offence. If you are located in Canada, this report has been made available to you based on your
representation that you are an “accredited investor” as such term is defined in National Instrument 45-106 Prospectus Exemptions and a “permitted client” as
such term is defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Under no circumstances is the
information contained herein to be construed as investment advice in any province or territory of Canada nor should it be construed as being tailored to the
needs of the recipient. Canadian recipients are advised that JM Financial Securities, Inc., JM Financial Institutional Securities Limited, their affiliates and authorized
agents are not responsible for, nor do they accept, any liability whatsoever for any direct or consequential loss arising from any use of this research report or the
information contained herein.

Online food delivery market in India consolidates into a virtual duopoly as investors get prudent

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Online food delivery market in India consolidates into a virtual duopoly as investors get prudent

Uploaded by

Copyright:

Available Formats

0 August 2020

ONLINE FOOD DELIVERY

Investors becoming Lower-tier cities hold Downgrade Info Edge

INDIA INTERNET Prince Poddar

06 Large-ticket investments decimated the competition

COMPANY JM Financial Research is also

Please see Appendix I at the end of

You can also access our portal

IndiaMART Intermesh Fin-tech Day Digital Payments Digital Insurance

JM Financial Institutional Securities Limited Page 2

Are we in the last mile yet?

JM Financial Institutional Securities Limited Page 3

JM Financial Institutional Securities Limited Page 4

Metro cities Non-metro cities 25%

JM Financial Institutional Securities Limited Page 5

Food delivery space – virtually a duopoly now…

…as a series of large-ticket investments in 2018 virtually

JM Financial Institutional Securities Limited Page 6

JM Financial Institutional Securities Limited Page 7

…ensuring that the recipients of the funds focussed on industry

FY18 FY19 FY20

Swiggy Zomato Swiggy Zomato

JM Financial Institutional Securities Limited Page 8

JM Financial Institutional Securities Limited Page 9

Lower tier cities and cloud kitchens - key to growth dynamics

Metro cities Non-metro cities

Average order value Cost of delivery Delivery times (mins)

JM Financial Institutional Securities Limited Page 10

JM Financial Institutional Securities Limited Page 11

JM Financial Institutional Securities Limited Page 12

Investors getting more prudent with funding

Exhibit 29. Investments received by Zomato and Swiggy since inception

Aug-10 Zomato 1 3 Info Edge

Sep-11 Zomato 3 14 Info Edge

Sep-12 Zomato 3 33 Info Edge

Jan-13 Zomato 10 85 Info Edge

Nov-13 Zomato 37 161 Sequoia, Info Edge

Nov-14 Zomato 60 660 Vy Capital, Info Edge, Sequoia

Feb-15 Swiggy 2 5 Accel, SAIF Partners

Apr-15 Zomato 50 700 Vy Capital, Info Edge, Sequoia

Sep-15 Zomato 60 1,000 Temasek, Vy Capital

May-16 Swiggy 7 NA Norwest Venture Partners, Accel, DST Global

Jan-17 Swiggy 5 NA InnoVen Capital (venture Debt)

Feb-18 Swiggy 100 740 Naspers, Meituan

Jun-18 Swiggy 210 1,255 DST Global, Naspers, Coatue, Meituan

Oct-18 Zomato 210 2,000 Ant Financial

Feb-19 Zomato 40 2,100 Glade Brook Capital

Feb-19 Zomato 62 2,100 Delivery Hero, Shunwei Capital, Saturn Shine

Jan-20 Zomato 50 3,050 Ant Financial

Mar-20 Zomato 5 3,250 Pacific Horizon Investment Trust

JM Financial Institutional Securities Limited Page 13

Period of high-cash burn for volume growth looks like nearing

JM Financial Institutional Securities Limited Page 14

Exhibit 32. A screenshot of the newly-launched Amazon food delivery platform

Source: Media Report

JM Financial Institutional Securities Limited Page 15

Notably, Indian market is far from mature

While global food delivery aggregators excelled during the pandemic…

…their Indian counterparts have lost some order volume

JM Financial Institutional Securities Limited Page 16

Pre-Covid Post-Covid 2,500

JM Financial Institutional Securities Limited Page 17

Sizing up the online food delivery market for aggregators!