Shares offered by meals supply firm Zomato’s in its maiden offering offered like scorching muffins. The 719-million share sale noticed 38 occasions extra bids at 27.5 billion. The IPO—first by an Indian unicorn—generated demand value greater than Rs 2 trillion—among the many highest for home IPOs.
Nearly three-fourth of the bids got here from institutional buyers, with the so-called certified institutional patrons (QIB) portion garnering 52 occasions subscription. Investment bankers mentioned a number of buyers didn’t get ample allotment within the anchor ebook and the demand spilled over into the IPO.
The excessive networth particular person (HNI) portion was subscribed almost 33 occasions and the retail portion was subscribed over 7 occasions and purposes of shut to three.2 million. The worker portion of the IPO remained undersubscribed at 62 per cent.
The enthusiastic response to the IPO is seen as a thumbs as much as Indian startup ecosystem and an endorsement of the home capital market.
“There’s little doubt that the success of Zomato IPO and submitting of DRHP by other blue blooded consumer tech internet titans like Paytm is a watershed moment for overall startup ecosystem and depicts the maturity of Indian inventory markets. Definitely a shot within the arm for all startups whether or not unicorns or at early stage,” mentioned Ankur Bansal, Co-founder and Director, BlackSoil.
Several different startups equivalent to Paytm, Nykaa, Policybazaar and Mobikwik are ready within the wings to listing.
“The success of this IPO will encourage other unicorns to tap the Indian capital markets; this will allow Indian investors to have access to such tech unicorns. It’s a bit early to tell about the full impact of the IPO. The efficiency of the inventory and the corporate over time will affect such IPOs,” mentioned Darius Pandole, managing director & CEO, JM Financial Private Equity.
Zomato’s IPO had the market divided with some buyers deciding to provide the IPO a large berth given its lack of profitability monitor file. Brokerages really useful purchasers with a high-risk urge for food to subscribe to the IPO.
Zomato’s losses have widened between FY18 and FY20 from Rs 107 crore to Rs 2,386 crore. However, the money burn has helped the corporate develop its topline 5 occasions from Rs 466 crore to Rs 2,605 crore.
“The firm has sure positives like asset-light scalable enterprise mannequin, expanded goal market put up the pandemic, first-mover benefit in meals supply enterprise. But its operations are producing heavy losses, albeit some enhancements in FY21,” Choice Broking had mentioned in a observe.
The worth band for the IPO was Rs 72-76 per share. Zomato’s IPO comprised Rs 9,000 crore of contemporary fundraise and Rs 375 crore secondary share sale by Info Edge. At the top-end of the worth band, the corporate can be valued at almost Rs 60,000 crore. The firm plans to utilise the web proceeds from the IPO in direction of funding natural and inorganic development initiatives. After the IPO, Zomato could have money of Rs 15,000 crore on its steadiness sheet, which the corporate says will give it a protracted runaway to pursue development.