Zomato IPO opens, all eyes set on its bidding offer

Zomato is one of the biggest startups which has grown exponentially in the last 5 years in India and has now announced to go public. Recently it acquired a sports and health-based startup, Fitso for Rs 100 crore. Usually, when companies go for IPO they focus on attracting investors and getting money from the public, whereas in the case of Zomato, their focus lies on to keep growing their business line.

Their focus lies not only in extending as a restaurant chain but also in disruptive hot spaces which have the potential to grow in the Indian market.

The initial public offering of Zomato has subscribed 52 percent on July 14, the first day of bidding, so far. The offer has received bids for 37.73 crore equity shares against an IPO size of 71.92 crore equity shares.

The retail investors are at the forefront as the portion reserved for them is subscribed 2.26 times, while non-institutional investors have put in bids for 9 percent against their reserved portion. The portion set aside for employees has subscribed 8 percent and that of qualified institutional buyers 17 percent.

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It should be noted that to date, Zomato has already mobilized Rs 4,196.51 crore from 186 anchor investors. However, this IPO comprises a fresh issue of Rs 9,000 crore by the company and an offer for sale of Rs 375 crore by the existing largest shareholder Info Edge. The price band for the offer has been fixed at Rs 72-76 per equity share. Zomato official says that this freshly raised money will be used for funding organic and inorganic growth initiatives (Rs 6,750 crore); and general corporate purposes.

Nikhil Kamath, Co-founder and CIO, True Beacon and Zerodha says, that Zomato’s market debut will pave the way for other Indian start-ups to go for IPOs in Indian markets, as Indian markets are the best platform for all the stakeholders. He added that the average order value of food delivery is consistently growing at 10 percent for the last 2 years for the company with a good market share.

He feels that markets are always ready to accept and accommodate good business, everything depends on how the company sustains its growth and profits going forward. The present time post-Covid 2nd wave looks conducive for the IPOs.