Zomato has created history by becoming the first unicorn startup in India to enter the market. The stock of Zomato made a great opening on Dalal Street on Friday. Shares of Zomato opened at Rs 115 on BSE, up 51.32 per cent premium over the issue price on BSE. Shares on the NSE opened at Rs 116, up 52.63 per cent. The food delivery aggregator has crossed Rs 1 lakh crore market capitalization with bumper listings. Zomato was valued at Rs 1,08,067.35 crore after a strong opening on Dalal Street.
Zomato’s initial public offering (IPO) of Rs 9,375 crore opened for subscription from July 14-16. The company has fixed a price band of Rs 72-76 per share. The company aims to raise Rs 9,375 crore through IPO which includes a fresh issue of equity shares worth Rs 9,000 crore and an offer for sale (OFS) of Rs 375 crore by existing investor Info Edge (India).
The Zomato IPO received an overwhelming response with over 40x subscriptions from both retail and institutional investors. The quota reserved for qualified institutional buyers was oversubscribed 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, Unicorn raised Rs 4,196 crore from 186 anchor investors by allotting 552.2 million shares at Rs 76 per share.
Zomato’s revenue had doubled to around Rs 2,960 crore from the last financial year 2019-20. The comp posted earnings before interest, tax, depreciation and amortization (EBITDA) loss of around Rs 2,200 crore. In February, Zomato had raised over Rs 1,800 crore in funding from Tiger Global, Quora and others, valuing the online food ordering platform at around Rs 40,000 crore.
“The Zomato IPO received a great response from investors and was subscribed 38 times. While the retail portion was subscribed to QIB and NII portion 51.8 times and 33 times respectively, as investors queued up for a piece of the food delivery business in India. Zomato is one of the two major players in India and the first of the new age unicorns to be listed on exchanges. Given the strong investor demand for the IPO, we expect a good listing for the company. While we expect good listing gains in the Zomato IPO, we also remain positive on the company’s long-term growth prospects, with strong delivery network, high barriers to entry, expected turnaround and significant growth in Tier-II and Tier-III cities The IPO has been rated SUBSCRIBE considering the opportunities offered,” said Jyoti Roy – DVP- Equity Strategist, Angel Broking Ltd.
“The listing of Zomato on Indian exchanges is a momentous moment for Indian capital markets and investors, who can now own a large and scalable new age tech companies. This makes the ball roll not only for Zomato but also for new age tech companies as India is now considered an emerging hub for startups and unicorns, many of which are gearing up for IPOs. Talking about Zomato, there is a lot of excitement about this name. The unique opportunity is attracted not only by the list of leading institutional investors but also by the youth. This was New India, tech startups are not only bridging the gap on the services side but also building a brand image and engagement amongst young Indians. And this trend is increasing as more and more young Indians are exposed to the internet and internet-based connectivity,” said Hemang Kapasi, Head of Equity, Sanctum Wealth Management.
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