An initial public offering (IPO) of equity shares that lists at a large premium to its issue price is referred to as a “successful IPO.” However, if the primary market’s major purpose is to assist companies in raising capital to fund growth, the success of an IPO is determined by whether the company was able to raise as much capital as it requires at the highest available price. Now, this was a basic introduction but have you heard of Zomato IPO?
Zomato will become the first online delivery company and the first Indian unicorn startup to list on the stock exchanges as a result of this IPO. The IPO is expected to increase Zomato’s market capitalization to $9 billion.
Power of Zomato IPO
The company has selected an excellent time to go public. As the stock markets is seeing historic gains, the result is increase in investor interest.
In addition, the primary market is booming, with record issuances in the first half of the year and a robust pipeline of IPOs in the second half.
Rs 9,375 crore Zomato IPO sold out on the first day of bidding. All thanks to a robust retail response and institutional investor backing.
By 4.30 PM all bids for 74,79,51,360 shares had been received, accounting for 104% of the issue size of 71,92,33,522.
Nikhil Kamath, co-founder and CIO at Zerodha, said: “The average order value of food delivery is consistently growing at 10 per cent for the last 2 years. Moreover, the company is earning a good market share. However, Zomato’s valuation at 25 times FY21 EV/sales versus 10 times for global peers and 12 times for Indian QSRs look on the expensive side.”
According to Kamath, the listed peer group has high valuations. “They can sustain such market valuations based on user experience and market position. Moreover, the tech platforms even if no profits are created,” he said.
With unicorns like Flipkart, Paytm, and Ola waiting in the wings, the Zomato IPO is likely to pave the path. On July 27, Zomato’s shares are expected to be floated on the BSE and NSE.
Retail investors can bid in lots of 195 shares up to a maximum of 13 lots. Zomato is selling shares in the price range of Rs 72-76 per share. The funds will be used to fund Zomato’s organic and inorganic expansion objectives, as well as for general business purposes.