Zomato CEO Deepinder Goyal has voluntarily extended his salary waiver of Rs 3.5 crore annually until the end of FY26, marking a two-year extension from his previous commitment. This decision is reflected in the company’s Qualified Institutional Placement (QIP) documents.
Initially, at the beginning of FY21, Goyal had announced he would forgo his salary for a 36-month period, which was set to end in FY24. However, with this latest extension, Goyal will continue to waive his salary until March 31, 2026. The QIP document mentions, “In letters dated March 24, 2021, and April 1, 2024, addressed to our board, Deepinder Goyal voluntarily waived his salary for the period from April 1, 2021, to March 31, 2026.”
Despite this, Goyal will continue to serve as Zomato’s Managing Director (MD) and CEO, and will be eligible for variable pay, the amount of which will be determined by the board at a later date.
Goyal holds a 4.18% stake in Zomato, valued at over Rs 10,000 crore based on trading data as of November 25, 2024. This significant value has been bolstered by a more than 140% rise in Zomato’s stock price year-to-date, with shares trading at Rs 277.35 per share as of 1 p.m. on November 26, 2024.
As of November 26, 2024, Zomato’s market capitalization stands at Rs 2,45,243 crore, or roughly $28.8 billion, compared to its competitor Swiggy, which has a market value of Rs 99,845 crore, or approximately $11.8 billion.
Zomato’s Stock Surge and QIP
Zomato’s shares saw a sharp increase of up to 6% on November 25, 2024, driven by two significant developments: its inclusion in the Sensex index and the approval of a Rs 8,500 crore ($1 billion) Qualified Institutional Placement (QIP).
The company has set a floor price of Rs 265.91 per share for the QIP, offering a discount of around 4% from its recent trading price. Depending on final consultations with bankers, a further discount of about 5% could also be applied.
Shareholders have approved the company’s plans to raise funds, which is aimed at reinforcing Zomato’s competitive edge, particularly against rivals such as Zepto and Swiggy. Morgan Stanley is the lead banker for the issue, as reported by Moneycontrol.
Once the QIP is completed, Zomato will have a cash reserve of about Rs 19,300 crore ($2.3 billion) to counter the increasing competition, especially from Zepto, which raised $1.35 billion earlier this year, and Swiggy, which recently debuted on the stock market with a $1.35 billion IPO.
Zomato plans to allocate a portion of the funds raised for marketing and expanding Blinkit, its quick commerce division, as competition in this space intensifies. Zepto and Swiggy have ramped up their investments to capture more market share.
Out of the Rs 8,500 crore to be raised, Zomato intends to spend Rs 2,137 crore ($250 million) on establishing and operating dark stores and warehouses. Another Rs 2,492 crore will be directed toward advertising, marketing, and branding efforts across its business.