Zomato, one of the leading food delivery application in India, made a bumper listing on the bourses on Friday. Zomato shares listed at Rs 115 apiece on BSE while opening, a 51.32 per cent surge on the issue price fixed at Rs 76. On NSE, Zomato shares increased to nearly 53 per cent to Rs 116 apiece on debut. Exceeding all the expectations, Zomato started its Dalal Street journey on a historic note. The stock was listed as 43rd largest company of India in terms of market value. With listing gains, the market capitalisation of Zomato touched Rs 1-lakh-crore mark. The value of Zomato stood at stood at Rs 97,280.23 crore, racing ahead of companies like SBI Card, Mahindra & Mahindra and Bharat Petroleum.
At present, Zomato shares are trading at Rs 125.85 apiece, up 10.85% from listing price, and nearly 66% from the IPO price. “For successful IPO allocation, though the listing is much above the expectations, current investors can hold on their shares as this new business is forecasted to growth at high digit in the early stage of cycle. For new & existing investors, can accumulate on a short to medium-term basis, as the trend of stock price stabilizes,” said Vinod Nair, head of research at geojit financial services.
“A key factor for the stock price to sustain this euphoria is to demonstrate improvement in profitability in the coming quarters. The company is highly expected to turn into profit from current lose, else the performance will be impacted,” he added.
“Zomato going public and the stellar listing is a landmark event for the Indian Start-ups and capital markets. It will be the beginning for a new era where the capital markets will welcome new age, innovative companies to raise capital and share wealth. This will also serve as an inspiration for many other companies to list in India than going abroad. There will be many more IPOs in the next few months/ years from home grown consumer internet and technology companies. I believe there is sufficient investor appetite for all of these IPOs,” Subramanya SV, chief executive and co-founder, Fisdom.
“Zomato, India’s leading online food delivery company, listed strongly on the exchanges today with 53% premium at INR 116/Share against its issue price of Rs76/share. Such stellar debut on exchanges led to its market capitalization crossing Rs 1 lakh crore. 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,” said said Sneha Poddar, research analyst, Broking & Distribution, Motilal Oswal Financial Services Ltd.
“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,” Poddar added.
“Given strong delivery network, high barriers to entry, expected turnaround and significant growth opportunities in tier-II and tier-III cities we continue to remain positive on the stock from a long term perspective. Post the stellar listing, we recommend that short-term investors that were looking for listing gains can exit the stock while long-term investors can book partial profits,” said Jyoti Roy, DVP, Equity Strategist, Angel Broking Ltd.”Given strong delivery network, high barriers to entry, expected turnaround and significant growth opportunities in tier-II and tier-III cities we continue to remain positive on the stock from a long term perspective. Post the stellar listing, we recommend that short-term investors that were looking for listing gains can exit the stock while long-term investors can book partial profits,” said Jyoti Roy, DVP, Equity Strategist, Angel Broking Ltd.
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