Zomato has made history on Friday by becoming India’s first internet companies to get listed on the bourses. The stock was listed at Rs 115 on BSE, saw an increase of 51.32 per cent premium over the issue price. On NSE, the stocks made a stellar debut at Rs 116, up 52.63 per cent.
Zomato initial 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).
The quota reserved for qualified institutional buyers was subscribed 54.71 times. The portion set aside for non-institutional investors was booked 34.80 times. The retail quota was subscribed 7.87 times. Ahead of the IPO, the unicorn raised ₹4,196 crore from 186 anchor investors by allocating 552.2 million shares at Rs 76 apiece.
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.
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“Zomato’s listing on Indian exchanges is a watershed moment for Indian capital markets and investors who can now own a large and scalable new age tech companies. It not only sets the ball rolling for Zomato but also for similar new age tech companies as India is now considered to be an emerging hub for startups and unicorns, of which many are lined up for initial public offering (IPO). 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. 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,” said Hemang Kapasi, Head of Equities, Sanctum Wealth Management.
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Source: News18