Food delivery service provider Zomato's Rs 9,375 crore share sale via initial public offering (IPO) was subscribed 36 per cent by 1:15 pm on the first day of the issue, data from the National Stock Exchange showed. Zomato shares were in high demand among the retail individual investors as the portion reserved for them was oversubscribed within hours of opening. The portion reserved for retail investors was subscribed 1.24 times. However, Zomato shares witnessed tepid demand from qualified institutional buyers and non-institutional investors.
Zomato received a total bids of 25.83 crore shares as against 71.92 crore shares on the offer. Over 19 crore bids for Zomato shares were received at the cut-off price, the NSE data showed.
The Zomato IPO is likely to pave the way for other digital economy companies to take the public route, with the likes of unicorns such as Flipkart, Paytm and Ola waiting in the wings. The shares of Zomato are likely to be listed on the BSE and NSE on July 27.
Zomato is selling shares in the price band of Rs 72-76 per share and retail investors can bid in lot size of 195 shares up to maximum of 13 lots. Zomato will use the proceeds to fund its organic and inorganic growth initiatives and for general corporate purposes.
Zomato's IPO consists of a fresh issue of Rs 9,000 crore and an offer for sale of Rs 375 crore by the promoter, Info Edge India. Ahead of the IPO, Zomato raised Rs 4,196.51 crore from 186 anchor investors, including New World Fund Inc, American Funds, Tiger Global Investments Fund, BlackRock Global, Lansforsakringar Asienfond, JPMorgan, Morgan Stanley Investment Fund, T Rowe Price and Canada Pension Plan Investment Board.
Brokerage Views On Zomato Initial Public Offering (IPO):
Brokerage firm Anand Rathi has recommended subscribing to Zomato IPO from a short term period.
"At the upper end of the IPO price band, the offer is valued at 29.9 times of its FY21 market cap to sales. Going forward, industry delivery percentage to net-revenue stands at 5% and with the Zomato average order value of Rs. 400 (i.e. Rs. 20 per delivery) the company is well poised and it is also placed at a sweet spot as the first mover advantage in the online food delivery market. Additionally, given the strong network effects, increasing frequency of order, huge scope for growth in tier-II and tier-III cities and large addressable market, we recommend a Subscribe (Short Term) rating to the IPO," Anand Rathi said in a report.
Mumbai-based brokerage firm Motilal Oswal has also recommended subscribing to Zomato IPO for listing gains.
"Investors with high risk appetite can subscribe for listing gains given fancy for unique and first of its kind listing in the food delivery business," Motilal Oswal said in a research report.