Last week, food delivery startup Zomato filedSebiZomato Limited - DRHP its Draft Red Herring Prospectus (DRHP) as a precursor to an Initial Public Offering IPO) in India. The company is said to be tendering shares worth $1.1 billion (Rs 8,250 crore), which includes a primary issue of $1 billion and secondary shares of $100 million.

In February, Zomato had raised $250 million in funding at a post-money valuation of $5.4 billion.

A media reportBloombergQuintWhy Zomato May Be Looking At IPO Valuation Of At Least $6.4 Billion quoted an analyst who opined that Zomato may be “looking at an IPO valuation of at least $6.4 billion”. Considering the fact that $6.4 billion is the arithmetic sum of the previous valuation of $5.4 billion and $1 billion in new primary funding, one hopes that this analysis was not the aforementioned analyst’s day job.

Jokes apart, it would come as no surprise if Zomato’s management and investors will be hoping for a valuation that is meaningfully higher than that of the last private funding round and will eventually get it to the coveted decacorn valuation milestone of $10 billion. This would make Zomato the highest valued foodtech startup in India and one of the highest valued Indian startups in general.

There is one impediment to this decacorn dream. Unlike private markets, the public market values companies on numbers rather than narratives. Metrics around profitability, growth, and free cash flows are critical. These aren’t necessarily Zomato’s greatest strengths. Zomato declined to respond to a detailed questionnaire sent by The Ken.

So how does Zomato measure up when it comes to these metrics? What else does the prospectus tell us about Zomato and the market? What are the other imperatives and challenges for Zomato around its public listing?

Let’s take a look.

Pandemic pop?

There is a school of thought that posits that now is the “best time” for Zomato to go public. The main driver for this bullishness is a belief that the pandemic has turned out to be a great tailwind for the company. Like many other e-commerce companies worldwide, the dynamics around work from home and general trepidation around venturing out should be a boost for Zomato’s food delivery business.