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Zomato turns profitable; MSMEs' relationship with fintechs

Zomato recorded a first-time profit of Rs 2 crore in the first quarter of FY24. By offering innovative cash flow-based lending, and GST-based lending, fintech startups have made loans more accessible. By FY25, India is likely to have up to 40 listed/IPO-ready new-age tech companies.

Zomato turns profitable; MSMEs' relationship with fintechs

Friday August 04, 2023 , 5 min Read

Hello,

India is restricting the import of laptops, tablets, and certain types of computers with immediate effect. Reasons cited for the restrictions include security and a boost to local manufacturing.

Speaking of domestic manufacturing, Mahindra & Mahindra's (M&M) electric mobility unit, Mahindra Electric Automobile Ltd, is raising Rs 1,200 crore from Singapore state investor Temasek Holdings. 

Last July, the parent company, M&M, had raised nearly $250 million from BII, a UK impact investor, at a valuation of $9.1 billion. The company is planning to invest Rs 10,000 crore over the next 7-8 years to set up a manufacturing plant for its electrical vehicles, which has been approved by the Maharashtra government.

In other news, Honasa Consumer Ltd, the owner of FMCG brands Mamaearth and The Derma Co., has received the much-awaited green light from the markets regulator, the Securities and Exchange Board of India, to proceed with its IPO.

Honasa Consumer's offering will consist of a fresh issue of equity shares valued at up to Rs 400 crore, along with an Offer For Sale (OFS) of up to 4,68,19,635 shares by promoters and existing shareholders.

ICYMI: Imagine a future where roads can power cars as they drive on them or homes store energy to fulfil daily power needs. Researchers have come up with a new way to store electricity in cement using cheap and abundant materials. The technology, they say, could potentially change the way electricity is stored. 

And finally, here’s the best of the 16th annual iPhone Photography Awards.

In today’s newsletter, we will talk about 

  • Zomato turns profitable
  • MSMEs' relationship with fintechs
  • India's growing tech IPO potential

Here’s your trivia for today: Which is the longest-running animated TV series?


Foodtech

Zomato turns profitable

Zomato recorded a first-time profit of Rs 2 crore in the first quarter of FY24 and operating revenue rose 71% to Rs 2,416 crore on the back of the B2B restaurant supplies vertical, Hyperpure. The food delivery firm reached profitability earlier than its previous guidance as it expected to hit the milestone by Q2 FY24.

Performance:

  • Gross order value in the food delivery business in Q1 grew 14% to Rs 7,318 crore from Rs 6,425 crore, while average monthly transacting customers stood at 17.5 million.
  • Hyperpure rose 126% to Rs 617 crore from Rs 273 crore last year. This was primarily due to an increase in the minimum order value which led to a rise in the average order value.
  • While Blinkit saw a marginal rise in Q1, order volume fell 6% from last quarter, mainly due to a temporary business disruption as several delivery executives went on strike in April.
zomato


Funding Alert

Startup: RTIwala

Amount: Rs 25 lakh

Round: Equity

Startup: Wallter Systems

Amount: Undisclosed

Round: Seed

Startup: UCLIQ

Amount: Undisclosed

Round: Angel


Fintech

MSMEs' relationship with fintechs

Many small business owners choose fintech startups over traditional banks due to the stringent criteria laid out by banks for unsecured loans. By offering innovative cash flow-based lending, and GST-based lending, fintech startups have made loans more accessible. 

"Typically, these unsecured loans are short-term in nature, spanning a maximum period of 2-3 years, or sometimes even shorter, tailored to the specific needs of each company," Mukesh Mohan Gupta, President of Chamber of Indian MSMEs, tells SMBStory.

Responsible lending:

  • Nirav Choksi of CredAble says fintech startups are bringing agility to MSME lending. However, despite the progress, the credit gap remains largely unchanged in numerical terms. 
  • According to Hardika Shah, Founder of Kinara Capital, fintech companies diversify the financing landscape with embedded finance, supply chain finance, and invoice financing.
  • However, fintech lending can lead MSME owners into a debt trap.“Charging interest rates of 30-40% comes out of ignorance and this misleads MSMEs," says Choksi.
Fintech msme


Report

India's growing tech IPO potential

By FY25, India is likely to have up to 40 listed/IPO-ready new-age tech companies. This number is likely to grow to 90 by FY28 due to their increased focus on profitability, according to a report by Redseer Strategy Consultants. 

Going public:

  • SaaS, B2C product companies, and fintech are among the most promising categories to produce IPO-ready companies, said Rohan Agarwal, Partner at Redseer.
  • About 50% of unicorns in India will be profitable by FY27. However, ~20% of unicorns will likely struggle due to regulatory challenges, plummeting demands, and unclear business models.
  • IPO-bound companies need to focus on building strong investor relationships, engaging with potential investors, and providing clarity on business models
IPO


News & updates

  • Tech detox: Shares in Chinese technology firms have fallen after the country’s online regulator announced plans recommending smartphone use for children be limited to a maximum of two hours a day.
  • Super Mario: Nintendo reported a surge in revenue and operating profit for the June quarter boosted by the success of the “Super Mario Bros. Movie” and the the popularity of its latest Zelda game for the Switch console.
  • Robo taxi: Waymo said that it will start accepting passengers in its fully driverless vehicles in Austin, Texas later this month. The company has been testing its vehicles on the streets of Austin since March, laying the groundwork for the eventual launch of a commercial ride-hailing service.


Which is the longest-running animated TV series?

Answer: The Simpsons. First aired in 1989, The Simpsons has had 34 seasons so far. And, Fox recently announced that it has renewed the series for two more seasons. 


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