Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy Independence Day, folks. 🙏

Today we’re diving into -
- Zepto’s road to profitability,
- Brookfield’s $500mn hospitality + hotels play,
- And India’s quickly rising food inflation.

Our read time today is 4 minutes and 42 seconds - faster than you can UPI the subzi-wala 20 200 rupees. 🍅

Let's dive in. 👇

Market Vibe Check 🥵

Zepto inches towards the public markets. 🤔

TLDR -
- Where others are burning billions, Zepto is managing to hit fundamental store-level profitability.
- Next 12-18 months target is to cross 10,000 Cr in revenue ALONG WITH ebitda positive finances.
- No future fundraises planned because Palicha saab is sitting on millions in VC money.

A month back, Zepto made a lot of noise (as usual) while looking for their big unicorn round’s funding.

They were in the market for $150 million at a $1.3bn valuation.

Investors finding out that there is STILL appetite for an investment as high-risk as this.

And it’s all because something is fundamentally going right with the company.

Zepto 4Xed their business during the “funding winter” and pushed 35+ of it’s dark stores to profits.

Internal targets are also pegged at a 10,000 Crore ($1.2bn) annual revenue run-rate with EBITDA profitability in less than 2 years.

Most other 10-minute delivery startups are bleeding out slowly and taking on compounding losses per month.

But Zepto seems to be doing something right.

Very ambitious... but bada soch is the only way to have bada dhamaka. 💥

Indian retail inflation races to a post-COVID high. 🚀

TLDR -
- Indian food inflation spiked past the upper end of RBI’s “inflation watch” for the 1st time since 2020.
- The insane food price swings we’ve seen of late are all because of uneven weather.
- That’s a blessing + a curse - this price spike will subside quick but might strike again.

The silent killer of your purchasing power is inflation - and it’s back in full force.

India’s CPI inflation rate is at 7.5% - a 1.5 year high and a number that we haven’t seen since COVID days.

Most of this bang-and-boom has been driven by food inflation (which makes up 50% of the CPI basket).

Food prices have been up 11.5% (officially) due to tons of monsoon irregularities and logistical mayhem with fresh fruit & veg supply.

Plus, in India, veggie vendors are pretty chaalu.

If tomato prices come down to Rs. 20/kilo, they will still sell it to you for Rs. 200/kilo for as long as they can.

Our only reprieve - core inflation (strips out food and inflation) actually moderated to just 4.9%, the lowest in 3 years.

Luke-warm… 🤷

Brookfield’s $500mn Indian hospitality bet seems to pay off handsomely. 💸

TLDR -
- 6 months back, markets were laughing at Brookfield for paying $500mn for hotels company Leela.
- Turns out root-level EBITDA profitability has 2X’ed.
- Growth plans are also in place with 4 more international hotels in the roadmap.

The Leela is a 5-star only resort company, and they were scooped up by Brookfield for $500mn last year.

They make money in two ways.

—-

Way 1 - own property

This is straightforward.

I am a hotel owner, I manage the property, people pay me thousands per night to stay.

Way 2 - managed property

Someone else owns a property.

They don’t have the branding, management, and operational expertise - so they outsource this to someone (like me, if I was the Leela).

I handle the business while property owner makes a fee, kinda like rental yield.

People pay me thousands per night to stay, I kick back a percentage to the land owner.

—-

Leela wants to take managed properties from 12 currently to 25+ in the next 2 years.

That’s 1 every two months - a pretty ambitious task.

They are also working hard on the niche, since there aren’t too many big 5 star Indian hoteliers other than Taj.

Brookfield is enjoying this a lot… 😅

In other news… ☕

Monday.com prints a stellar 42% revenue jump (TC)

CVC Capital revives their stale IPO plans (FT)

China’s $2.9 trillion trust industry starts to teeter (BBG)

Plane availability puts Go First into jeopardy (Mint)

PayPal shuffles their CEO (BBG)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CZep