It also touched the upper circuit of Rs 138 on the BSE soon after listing, and saw its market cap cross Rs 1 lakh crore.

A man holding up a phone with Zomato splash screen open, only hands and phone screen visible in frame
Money IPO Friday, July 23, 2021 - 12:34

Zomato made a stellar debut on the stock exchange on Friday, with the stock listing at a 52.6% premium at Rs 116 on the NSE. It touched the upper circuit of Rs 138 on the BSE soon after listing, and saw its market cap cross Rs 1 lakh crore. At the time of writing, the stock was trading at Rs 126.7, and had a market cap of Rs 99,163.07 crore on BSE.

Zomato’s market cap is now higher than that of promoter Info Edge, as well as companies such as Dr Reddy’s Lab, Britannia Industries, SBI cards and others. 

The IPO of the first of a long list of Indian startups was much awaited, and saw oversubscribed over 38 times at the end of issue. The largest IPO of the year so far, Zomato opened at Rs 72-76 per share. Qualified institutional buyers (QIB) subscribed 51.79 times of their earmarked portion. The portion of the non-institutional investors was subscribed 32.96 times. Further, retail investors subscribed 7.45 times of the portion allocated to them. The portion reserved for employees was subscribed 0.62 times. Companies such as Paytm and Mobikwik have filed their papers for public issue as well. 

Sneha Poddar, Research Analyst, Broking & Distribution, Motilal Oswal Financial Services Ltd, said, “Despite the large size of IPO at Rs 9,375 crore and rich valuations, the company saw healthy overall subscription of 38x. There is lot of fancy for such unique and first of its kind listing in the market. Zomato with first mover advantage is placed in a sweet spot as the online food delivery market is at the cusp of evolution. It has consistently gained market share over the last four years to become the category leader in India in terms of GOV (Gross Order Value). It enjoys couple of moats and with economics of scale started playing out, the losses have reduced substantially. Though, predicting the growth trajectory at this juncture is little tricky, but it’s a good bet from long term perspective.”

Zomato’s revenue in FY20 had more than doubled to $394 million (around Rs 2,960 crore) from the previous fiscal, while its earnings before interest, taxes, depreciation and amortization (EBITDA) loss was around Rs 2,200 crore.

In February, Zomato had raised $250 million in funding from Tiger Global, Kora and others, valuing the online food ordering platform at $5.4 billion.

In a letter, Zomato founder Deepinder Goyal said that India is a tough market to operate in, and that Zomato and Swiggy are two of the best food delivery apps in the world today

“The tremendous response to our IPO gives us the confidence that the world is full of investors who appreciate the magnitude of investments we are making, and take a long term view of our business,” he wrote. 

The company, which was incorporated in 2008, is present in 525 cities in India with 3.89 lakh active restaurant listings. It is present in 23 countries outside India.

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