Zomato has made history by becoming the first unicorn startup in India to hit the market. Zomato share saw a stellar debut on Dalal Steet on Friday. Zomato stock opened at Rs 115 on BSE, an increase 51.32 per cent premium over the issue price on BSE. On NSE, the stocks made a debut at Rs 116, up 52.63 per cent. With the bumper listing, the food delivery aggregator has crossed the market capitalisation of Rs 1 lakh crore. The value of Zomato stood at Rs 1,08,067.35 crore after an overwhelming debut on Dalal Street.
Zomato initial public offering (IPO) worth 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 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).
Zomato IPO received an overwhelming response from both the retail and institutional investors, with over 40 times subscription. 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.
“The Zomato IPO received great response from investors and was subscribed 38 times. While the retail portion was subscribed 7.5 times the QIB and NII portion was subscribed by 51.8 times and 33 times respectively as investors queued in for a slice of the food delivery business in India. Zomato is one of the two leading players in India and the first of the new age unicorns to list on the exchanges. Given strong investor demand for the IPO we expect a good listing for the company. While we expect decent listing gains in the Zomato IPO we also remain positive on the long term growth prospects of the company Given strong delivery network, high barriers to entry, expected turnaround and significant growth opportunities in tier-II and tier-III cities and had given a SUBSCRIBE rating to the IPO,” said Jyoti Roy – DVP- Equity Strategist, Angel Broking Ltd.
“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 IPO. Coming back to Zomato, there is lot of euphoria around the name. The unique opportunity is attracted not only by the list of marquee institutional investors but also by youngsters. This is the new India were tech startups are not only bridging the gap on the services side but are also creating a brand image and relatedness among the young Indians. And this trend is on the rise with more and more young Indians are exposed to internet and internet based connectivity,” said Hemang Kapasi, head of equities, Sanctum Wealth Management.
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