Do you remember the days when you had to go out or call the restaurants to end up the cravings for food? Well! thanks to the startups like Zomato that end up with the hassle of waiting for hours to get the food delivered at your place. Started in 2008 by Deepinder Goyal and Pankaj Chaddah the firm is now planning to expand more with the IPO opening on July 14, 2021. Let’s see into the details to know should you invest in Zomato IPO?
No doubt the company has seen many ups and downs over the year, but with the objective of funding organic and inorganic growth initiatives.
Let’s start with the Zomato IPO review and then move ahead with the details of the revenue and other aspects essential for making a decision of whether one should subscribe for the IPO of this startup firm.
Should You Invest in Zomato IPO or Not?
Every IPO in the share market comes up with certain pros and cons and so does the Zomato IPO.So before subscribing it becomes important for you to know that whether it is worth investing in or not.
As already discussed for this let’s look into some of the fundamentals of the company.
As per the company’s annual statement, Zomato has recorded a huge jump of up to 96% in the revenue.
On the other hand, the operational revenue of the company has increased from ₹1,315 Crores in FY 2019 to ₹2,605 Crores in FY 2020.
Even after facing the pandemic and lockdown in the year 2020 the company was able to generate decent revenue.
But now look at the expenses, which also increased from 3,607.80 Crores to 5,066.11 Crores.
Overall, the company is not able to show a good record in managing losses. But as far as its services and other factors are concerned it is able to boost the unit economics of the company.
Zomato is coming up with an IPO of 65 lakh equity shares that aggregates up to ₹9375 crores of which the Fresh Issue is ₹9000 crores while the Offer for Sale is ₹375 cr.
The IPO will open on July 14, 2021, and one can subscribe for three days i.e till July 16, 2021.
When it comes to the IPO, the major concern of the people is the price band. So here, being the startup, the Zomato IPO price is ₹72-₹76 per share with a lot size of a minimum of 195 shares.
Although the company can open a great opportunity for the investors to earn a good profit then the total reservation for the retail investors is kept at 10%. On the other hand, the QIB and NII have a total reservation of 75% and 15% respectively.
Well this is because of the SEBI guidelines for the startups bringing the book-build IPO and the other reason being the institutional investors are better aware of the risk and hence could take the public offerings in the right direction.
Also, unlike other IPOs, Zomato is going to list only on the Bombay Stock Exchange. Isn’t it strange? Although the reason behind it is still not clear the one thinking of subscribing must consider the listing details of the company as well.
So, is it worthy enough for the retail investors to block their amount for 10 days by investing in the Zomato IPO? Let’s now dive into some more details about the company.
Zomato started in 2008 has recorded a valuation of $5.4 billion in February 2021 after raising funding of $250 million from Kora, Fidelity, Tiger Global Management and others .
The pre-IPO funding of the company done by another investor Dragoneer Investment Group brings the total valuation to $5.5 billion.
There are many investors of the company who is able to raise the company’s valuation over the years. The top investors among them with the 15% voting rights are Infoedge (18.55%) and Alipay &Antfin (16.53%).
Here the former is the major promoter who is selling off his shares worth ₹375 through an Offer for Sale in the IPO.
Another top investor of the company with the percentage of their shareholding is given in the table below:
Seeing the GMP data of the company, its value is somewhere between ₹8-₹17. The value is expected to increase on the opening date that depicts that the listing would be somewhere between ₹89-₹93 i.e. 20% more than the issue price.
Seeing the above data if you are willing to invest in the Zomato IPO, then apply online via the ASBA method. Before applying make sure you open a Demat account with the renowned stockbroker.
To open a Demat account for FREE, just fill in the basic details in the form below.
- Once you opened a Demat account, log in to the trading platform.
- Click on ‘IPO’ and then select ‘Zomato IPO’.
- Submit bids by entering price and market lot.
- Select the mode of payment and click on Submit button.
- On allotment, the shares get credited to your Demat account.
As far as Zomato IPO is concerned, investing in the startup company comes up with too many risks. Also, seeing the fundamentals the company has not shown good numbers over the year.
The P/S of the company is 25.41 now according to its global peers this ratio is quite high that clearly depicts that the Zomato IPO is overvalued.
Also, the listing of the company is only restricted to the BSE thus you would not be kept away from the listing benefits in both the exchange.
Above all, since it is a startup firm, the IPO is reserved only for the 10% for investment for the retail investors, while the reservation for the QIBs and NII is fixed at 75% and 15% respectively.
So, it good to do a proper analysis and follow the advice of your financial adviser before making an investment decision in the Zomato IPO.
Now apply for the IPO with ease by opening a Demat account for FREE!
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