Zomato initial public offering (IPO) worth Rs 9,375 crore is all set to hit the market on Wednesday. The has been the largest IPO since SBI Cards and Payment Services’ Rs 10,341 crore issue in March 2020. “We see a lot of excitement around the Zomato IPO given it’s the first large consumer tech company getting listed. Key players in the food tech industry like Zomato and Swiggy and have been able to create multiple competitive advantages like last‐mile delivery infrastructure, customer data, strong brand and convenience/choice driving network effect," said YES Securities in a note.
Ahead of the IPO, Zomato raised over Rs 4,196 crore (Rs 41,96,51,86,380) from 186 anchor investors in lieu of 55,21,73,505 equity shares at Rs 76 each, according to the stock-exchange filing.
All you need to know about Zomato Rs 9,375-crore IPO opening today
1) Zomato initial public offer consists of fresh issuance of equity shares of Rs 9,000 crore, and an offer for sale (OFS) of Rs 375 crore by existing selling shareholder Info Edge.
2) The price band for Zomato IPO has been fixed at Rs 72-76 per equity share.
3) The IPO will open for subscription on July 14 and the bidding will close on July 16.
4) Investors can bid for a minimum of 195 equity shares and in multiples of 195 equity shares thereafter. The retail investors can apply for a minimum of Rs 14,820 worth of shares. At a higher price band of Rs 76 per equity share, an investor can book a maximum of Rs 1,92,660 shares.
5) The quota for retail investors Zomato IPO is fixed at 10 per cent of the net offer. At least 75 per cent has reserved for Qualified Institutional Buyer quota while 15 per cent is fixed for NIIs.
6) The popular food aggregator is likely to be listed on the bourses by July 27. The finalisation of the basis of allotment is likely by July 22. The refund will be initiated by July 23.
7) Kotak Mahindra Capital Company, Morgan Stanley India Company, Credit Suisse Securities (India) the Global Coordinators and BLRMs. BofA Securities and Citigroup Global Markets India will manage the issue. Link Intime India is the registrar of the issue.
8) Zomato posted a consolidated loss of Rs 816.43 crore in financial year ended March 2021. Revenue from the operations dropped to Rs 1,993.78 crore during the same period. The Covid-19 pandemic has severely affected the business last year.
What Analysts Suggest:
“While we see strong investor interest despite punchy valuations at 25x FY21 EV/sales given the uniqueness of the business model, the path to profitability is still not clear. While growth potential and a cash rich balance sheet offer immense growth potential, its difficult to value the stock on conventional parameters. Hence, we would advise to subscribe for listing gains only and would wait to see multiple legs of the story unfold before coming up with a more nuanced fundamental view," said analysts from YES Securities.
“Zomato is the first unicorn tech company to be listed on exchanges with a market cap of ₹59,623 crs (at upper band) taking it into top 100 listed entities in India. The company is one of the leading players in the food tech industry in India with a market share of 45 per cent. Zomato offers multiple services through its food platform in the form of search and discovery, food delivery, customer generated contents, Hyperpure and loyalty program such as Zomato Pro. Zomato is being listed at a revenue multiple of 27x its FY21 revenues whereas global peers trade in the range of 3-19x price to sales. However, the opportunity and scope of further growth is significant for Zomato," said LKP Securities in a report.