It seems to be a fitting ode the Charles’ Dickens immortal lines: ‘It was the best of times, it was the worst of times… it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…’, from A Tale of Two Cities. They referred to the contrast of epochs in the cities of London and Paris.
What’s unfolding today is in the world of listed tech startups, in the cities of London and Mumbai. Two tech startups, both in the food delivery space. One founded in the year 2008 and listed in 2021, the other founded in 2020 and listed the same year. One with a market capitalisation of 304.02 Crore Euros (Rs 27,559 crores); the other with a market capitalisation of Rs 2.49 lakh crores. One listed on the London and Amsterdam Stock Exchanges, the other on the Bombay and the National Stock Exchanges in India. This the story of Just Eat Takeaway and Zomato.
So, What’s The Big Deal?
Zomato with a market capitalisation of a mere Rs 2.49 lakh crores is set to replace the steel giant JSW Steel on the BSE SENSEX 30. Just Eat Takeaway, with a market capitalisation of Rs. 27,559 crores approximately, is on its way to getting de-listed from the London Stock Exchange.
The timing just adds to the spookiness of the similarity. Zomato replaces JSW Steel on the BSE SENSEX on the 23rd of December, 2024. Just Eat Takeaway’s delisting from the LSE comes into effect from the 27th of December 2024.
The Two Stories:
1. ZOMATO
Zomato–originally known as ‘Foodiebay’–was founded in 2008 by Deepinder Goyal and Pankaj Chaddah in India. It began its journey as a simple online restaurant directory. Not before long it transformed into a comprehensive food discovery and delivery platform. Its IPO came in July 2021, at a time when the company was still not posting profits. It was oversubscribed all the same. Came June 2022, and Zomato announced the acquisition of Blinkit for approximately $568 million in an all-stock deal. This acquisition was part of Zomato’s broader strategy to expand beyond food delivery and capture a larger share of the daily essentials market. It was not until the first quarter of financial year 2024 that Zomato posted a profit on its books for the very first time.
Today it set to become the first new-age tech stock to replace JSW Steel in the BSE Sensex 30 as part of the index reconstitution, which will come into effect from December 23.
Zomato’s entry in the index comes amid a stellar rally seen during the last 12 months. A surge by a whopping 126 percent this year. JSW Steel’s shares have given up over 10 percent during the same period.
Zomato’s numbers don’t evnd even there. The delivery-tech major reported a mindboggling 389 percent growth in its consolidated net profit at 176 crore rupees during the July-September quarter this year. Compared that to a meagre 36 crore rupees the year before.
2. JUST EAT TAKEAWAY
Just Eat Takeaway.com was founded in the year 2020. It was the result of a merger between London-based Just Eat and Amsterdam-listed Takeaway.com. The company was listed on the London and Amsrterdam Stock exchanges as well as on Wall Street in the US.
In the year 2022, it scrapped its US listings and stuck to its dual listing in London and Amsterdam.
The company’s revenues for the first half of 2024 stood at €2,570 million. This was 0.7 percent less than €2,588 million it had posted during the first half of 2023. Net losses, however, at €301.0 million were a sizeable 17 percent more than those posted in the first half of 2023.
Now, the group is set to scrap its listing on the London Stock Exchange.
High costs, administrative burden, low liquidity and trading volumes of its shares, as well as complexities of disclosure and regulatory requirements required to maintain a London listing were the reasons cited by the company for this decision.
WHY IS THE CONTRAST SIGNIFICANT
Notwithstanding the huge difference in market capitalisation, it is curious to note that while the same business is raking in big numbers in one market, it is floundering in another. India is a big market, but margins have always been more in the first world. Or is it that Indian entrepreneurs have been able to crack delivery tech better than the first world? Just Eat Takeway is but five years old, Zomato is sixteen. And it took fifteen years, even for it, in a huge market like India to post profits.
Somewhere else, both these companies could take a closer look at another delivery boy who holds the power of shaking Wall Street today. That name happens to be Amazon…
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