The much-awaited Zomato initial public offering (IPO) has been subscribed 20 per cent on July 14 on the first day of bidding. The retail portion of the public offering was subscribed nearly 100 per cent within an hour of opening. The offer has received bids for 14.48 crore equity shares against IPO size of 71.92 crore equity shares, according to the data available in on the stock-exchange.
Zomato IPO comprises fresh issuance of equity shares of Rs 9,000 crore, and an offer for sale (OFS) of Rs 375 crore by existing selling shareholder Info Edge. Investors can bid for a minimum of 195 equity shares and in multiples of 195 equity shares thereafter.
The non-institutional investors have applied for 2 per cent against their reserved portion. Zomato employees have so far subscribed 3 per cent from the portion set aside for them. The qualified institutional buyers are yet to participate in the offer.
Nearly 75 per cent of the total offer has been reserved for qualified institutional buyers while up to 10 per cent for retail investors. The rest 15 percent for non-institutional buyers. At least 65 lakh equity shares are reserved for employees of the company.
Zomato has raised Rs 4,196 crore by allotting 55.2 crore shares to anchor investors. “Some of the key Marquee investors who were allotted shares in the anchor book include Tiger Global Investments Fund, BlackRock Global, Fidelity Funds, JPMorgan, Morgan Stanley Investment Fund, and T Rowe Price. Along with global investors the anchor portion witnessed strong participation from domestic mutual funds who were allotted 18.4 crore shares aggregating to Rs. 1,399 crore out of the Rs. 4,196 crore anchor book,” said Angel Broking in a note.
Zomato is one of the leading online food services platforms in India, in terms of value of food sold, connects customers, restaurant partners and delivery partners, serving their multiple needs. Zomato mobile application is the most downloaded food and drinks app in each of the last three fiscal years, according to RedSeer. At least 32.1 million average monthly active users visited Zomato’s platform during FY21. Out of then, 6.8 million users placed order. Spanned over 500 cities in India, it has 1.5 lakh active food delivery restaurant listings and 1.7 lakh active delivery partners as of FY21.
“Zomato with first mover advantage is placed in a sweet spot as the online food delivery market is at the cusp of evolution. It enjoys couple of moats and with economics of scale started playing out, the losses have reduced substantially. However, predicting the growth trajectory at this juncture is little tricky for next few years. The valuation also appears expensive at 25x FY21 EV/Sales compared to average of 9.6x for global peers and 11.6x for Indian QSRs. Though, valuing such early stage businesses on plain vanilla financial matrix might not give the right picture and may look distorted. 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,” said Motilal Oswal Financial Services in a note.
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