zomato – Zomato IPO Review – Everything you need to know about Zomato IPO – Zomato IPO Latest News

Zomato, an online food delivery platform, shares were trading with premium in the primary market, ahead of its Rs 9,375-crore IPO. The public issue will hit Dalal Street on July 14, at the price band of Rs 72-76 per share. On Monday, Zomato shares were trading at Rs 86.25 apiece in the grey market, a 13.5 percent or Rs 10.25 upside over IPO price, according to the people who deal in shares of unlisted companies. Zomato, India’s homegrown unicorn, would be the first of many Indian tech startups to list on the stock exchanges. Naukri.com’s parent company, Info Edge holds a stake of about 18.55 percent in the food delivery platform. The average cost of acquisition of equity shares for the selling shareholders is Rs 1.16 per equity share. The weighted average return on net worth for the last three fiscals is 49.09 percent.
When is the Zomato IPO closing?
The initial public offering will close for subscriptions on July 16 (Friday).
What are the objectives of the issue?
The restaurant aggregator has said it will utilize the net proceeds from the fresh issue for funding organic and inorganic growth initiatives (Rs 6,750 crore) and general corporate purposes.
What is the issue size?
The issue comprises fresh issuance of shares, aggregating up to Rs 9,000 crore. Additionally, there’s an offer for sale of up to Rs 375 crore by current shareholders.
What is the IPO’s price band?
The price band for this IPO is fixed at Rs 72-76.
What is the lot size?
Investors can subscribe to this IPO by betting for a lot of 195 shares or multiples. Retail investors will be able to bid for a maximum of 13 lots at the higher end of the price band.
What is the size of the quota reserved for retail investors?
The quota for retail investors has been fixed at 10 percent of the net offer. Qualified institutional buyer (QIB) quota is fixed at 75 percent and that of non-institutional investors (NICs) has been fixed at 15 percent.
What about the employee quota?
As many as 65 lakh equity shares will be offered to employees who are eligible.
When will the allotment be finalized?
It is expected that the basis of allotment will be finalized by July 22. Refunds are likely to be initialized by July 23. The credit of shares to Demat accounts is likely to happen by July 26.
When will Zomato get listed?
The food delivery giant is likely to list by July 27.

The brokerage firm said that Zomato is placed in a sweet spot as the online food delivery market is at the cusp of evolution. It enjoys a couple of moats and with the economics of scale started playing out, the losses have reduced substantially. However, predicting the growth trajectory at this juncture is a little tricky for the next few years. The valuation also appears expensive at 25x FY21 EV/Sales compared to an average of 9.6x for global peers and 11.6x for Indian QSRs. Though, valuing such early-stage businesses on a plain vanilla financial matrix might not give the right picture and may look distorted. Investors with a high-risk appetite can subscribe for listing gains given fancy for unique and first-of-its-kind listing in the food delivery business.

Zomato’s IPO will improve its cash levels to Rs 15,000 crore, which will serve as currency for M&A, investments in tech & customer acquisitions, and general corporate purposes. This cash pile should easily help sustain burn rates for a good 7-9 years. At the upper price band, Zomato’s valuation of 5.1X FY24 EV/Sales may appear optically demanding. However, given the fledgling nature of the business, duopoly market, immense upside penetration potential, the humongous untapped online opportunity of the adjacent verticals, and scarcity of premium, the research firm has recommended subscribing for listing gains

Zomato is looking to invest in new products, technologies, and features for the benefit of its customers. For example, Zomato is in the process of rolling out a grocery delivery marketplace on its platform on a pilot basis. Food Services is a competitive market in India comprising food delivery players like Zomato and Swiggy, cloud kitchens like Rebel Foods, and branded Food Services players (including quick-service restaurants like Dominos, McDonald’s, and Pizza Hut, among others). Food delivery players also compete with multiple other participants in the Food Services industry including restaurants that own and operate their own delivery fleets, traditional offline ordering channels, such as take-out offerings and phone-based ordering, local publications, and other media, online and offline.

Zomato builds relationships with restaurant partners through their offline on-field sales force. They enter into legally binding agreements with restaurant partners who elect to purchase their services, such as advertisement, food delivery, Hyper purity, among others. The creation of listings on their platform is free of charge. The end-to-end Food Services approach makes Zomato the most unique Food Services platform globally combining the offerings of platforms such as Yelp, DoorDash, and OpenTable in a single mobile app. Food delivery is highly complex as food is a highly perishable commodity, which requires careful handling while maintaining high levels of hygiene and real-time on-demand service. The company’s precise and real-time, demand forecasting, fleet optimization, and intelligent dispatch technology optimizes the matching of orders and delivery partners using machine learning.

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