ZOMATO food delivery partners is seen on a road in Kolkata , India , on 14 July 2021 . ZOMATO ,an Indian food delivery company, which is valued at over $9 billion , announced its IPO of 9375 Crore INR today . (Photo by Debarchan Chatterjee/NurPhoto) (Photo by Debarchan Chatterjee / NurPhoto / NurPhoto via AFP)

Shortly after a stellar stock market debut, online food delivery firm Zomato is bidding to broaden its portfolio through an investment in online grocery delivery service Grofers.

The food delivery giant has infused a total of US$100 million in Grofers, out of which $70 million will be for Grofers India and $30 million in its wholesale entity Hands On Traders, reports the Financial Express.

The investment will give Zomato a 9.16% stake in Grofers India and an 8.4% stake in Hands On Trades. The two companies won the approval of the Competition Commission of India regulator on August 13.

Grofers attained unicorn status after the funding round with a valuation of over $1 billion. It joins 21 other Indian startups which entered the elite club this year.

Zomato is reportedly planning a larger investment round in Grofers, amounting to over $400 million as it sees good potential in the e-grocery space. The Covid-19 pandemic and government restrictions on the movement of people have led to a surge in online grocery shopping. Analysts believe the trend is here to stay and smaller cities will be the next growth frontier.

Last month, Zomato’s initial public offering was oversubscribed 38 times driven by strong institutional investor interest. It received bids for 27.5 billion shares against 719 million shares on offer, stock exchange data showed.

As a result, Zomato’s valuation surged to $12 billion. It marked India’s biggest public offering since March 2020. Other leading digital firms such as Paytm, Flipkart, and Ola are also planning to go public.

Despite going public, Zomato’s loss widened to 3.56 billion rupees for the April-June quarter for the financial year 2021-22, up against the 998 million rupees in the year-ago quarter. In a statement, the company said, “Revenue growth was largely on the back of growth in our core food delivery business which continued to grow despite the severe Covid wave starting April. On the other hand, Covid significantly impacted the dining-out business in Q1 FY22 reversing most of the gains the industry made in Q4 FY21.”

Last year, Zomato took over Uber Eats in an all-stock deal, estimated to be around $300-350 million, after the ride-hailing giant Uber Technologies Inc decided to exit the food delivery business in India.

Incorporated in 2008, Zomato is based out of Gurgaon, near New Delhi, and has a presence in 525 cities in India with 389,932 active restaurant listings. It also has a presence in 23 other countries.