In a revealing email sent before Zomato's highly anticipated Initial Public Offering (IPO) in July 2021, Sanjeev Bikhchandani, founder of Info Edge and an early investor in Zomato, shared crucial insights on IPO pricing strategy with Zomato's founder Deepinder Goyal. This strategic advice, which has come to light through Megha Vishwanath's book 'Unseen: The Untold Story of Deepinder Goyal and the Making of Zomato,' offers a glimpse into the delicate balancing act of IPO pricing.

Key Points from Bikhchandani's Email

Bikhchandani's email highlighted three critical constituencies to consider when pricing an IPO:

1. Current shareholders
2. Institutional investors
3. Retail investors

He emphasized the importance of finding the right balance to satisfy all these groups, warning against the pursuit of high listing pops that could potentially shortchange existing shareholders.

The Pricing Dilemma

Bikhchandani cautioned that a 100% pop on listing day would signal leaving too much money on the table. He drew attention to the conflicting incentives at play, noting that investment bankers often favor buy-side institutions over issuers. In his words, companies are treated as 'products being sold' rather than clients.

Lessons from Info Edge's IPO

To illustrate his point, Bikhchandani shared Info Edge's experience from its 2006 IPO:

This example demonstrated how a well-priced IPO could maintain its reputation even through market turbulence.

Zomato's IPO Outcome

Following this advice, Zomato's IPO was priced and performed as follows:

Implications for Investors

This behind-the-scenes look at Zomato's IPO pricing strategy offers valuable insights for investors:

1. IPO pricing is a complex process balancing multiple stakeholder interests.
2. A high listing pop doesn't always indicate a successful long-term investment.
3. Market volatility can affect even well-priced IPOs in the short term.

As the Indian stock market continues to see new listings, understanding these dynamics can help investors make more informed decisions when participating in IPOs.

Eternal Limited, formerly known as Zomato, has reported mixed financial results for the second quarter of fiscal year 2026. The company saw a significant surge in revenue but experienced a decline in net profit compared to the same period last year.

Revenue Soars, Profit Declines

Eternal's consolidated revenue from operations jumped 183% year-on-year to INR 13,590.00 crore in Q2 FY26, up from INR 4,799.00 crore in Q2 FY25. However, the company's consolidated net profit fell 63% to INR 65.00 crore, down from INR 176.00 crore in the corresponding quarter of the previous year.

Segment Performance

The company's performance varied across its different business segments:

The quick commerce segment, which includes Blinkit, showed exceptional growth, while the food delivery business maintained steady progress. The hyperpure supplies segment saw a decline, primarily due to the shift to inventory ownership in quick commerce.

Operational Highlights

• Quick commerce achieved a 137% year-on-year growth in net order value, marking its highest growth in 10 quarters.
• The company expanded its network by adding 272 stores and 39 lakh average monthly transacting customers.
• Blinkit reduced losses to INR 156.00 crore from INR 162.00 crore, with an improved adjusted EBITDA margin.
• Food delivery showed 14% year-on-year growth with profitability reaching an all-time high of 5.3% of net order value.

Market Response

The market responded positively to the results, with Eternal's stock gaining 4% to hit a 52-week high of INR 368.45.

Future Outlook

While the company has shown strong revenue growth, the decline in profits may be a point of concern for investors. Eternal's focus on expanding its quick commerce segment and improving profitability across all business units will be crucial for its future performance.

The company's transition to an inventory-led model in quick commerce and its impact on financial metrics will be an area to watch in the coming quarters. Additionally, the ongoing expansion of the store network and customer base in the quick commerce segment could be key drivers for future growth.

As Eternal continues to navigate the competitive landscape of food delivery and quick commerce, its ability to balance growth with profitability will be critical for long-term success.