All eyes are set on India’s first food unicorn startup listing on Friday. Zomato will get listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) at 10 am on July 23. The Rs 9,375 crore issue of Zomato received a stellar responses from investors when it had opened for subsrcription last week. Investors put a bid worth Rs 2.13 lakh crore on Zomato issue price.
Zomato intial public offering (IPO) opened for subscription from July 14-16. The food delivery application has fixed a price band of Rs 72-76 per share. The company aimed to raise Rs 9,375 crore through the IPO which comprises a fresh issue of equity shares worth Rs 9,000 crore and an offer for sale (OFS) worth Rs 375 crore by existing investor Info Edge (India).
Considering the strong response from the investors and strong premium in the unofficial market, experts predict a strong listing gains for Zomato. The analysts suggest Zomato stock could list at over Rs 100 per share, more than 30 per cent premium over final issue price. The analysts also predict at least 15 per cent premium on the listing day.
Zomato will be the first internet companies and startups in India to get listed on bourses. The proceeds from the fresh issue will be used towards funding organic and inorganic growth initiatives and for general corporate purposes, according to the information in the red herring prospectus.
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Zomato’s revenue had jumped over two-fold to around Rs 2,960 crore from the previous fiscal year in 2019-20. The comp its earnings before interest, taxes, depreciation and amortisation (EBITDA) loss was around Rs 2,200 crore. In February, Zomato had raised over Rs 1,800 crore in funding from Tiger Global, Kora and others, valuing the online food ordering platform at around Rs 40,000 crore.
“Zomato primarily caters in the Indian online food delivery market which is expected to grow to at CAGR of 20% over the next 5 years to touch $11.1bn. Zomato is well positioned to take advantage of India’s food delivery market led by first mover advantage given the lower penetration seen compared to other countries like China and US. The opportunity is immense, but once the euphoria on the listing gets settled, investors need to look more constructively on the longer term improvement in various metrics, further disruption (if any) and consistency on delivery on the premise on which the IPO is coming,” said Hemang Kapasi, head of rquities, Sanctum Wealth Management.
“These businesses are to be looked from longer term perspective as they are tech based businesses which have disrupted the old model of delivery but they themselves can also get disrupted. The first mover normally has an advantage which currently Zomato enjoys and can expect listing gains by 20-25% as indicated in grey market,” he added.
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Source: News18