Zomato IPO: Investors Gobble Up Stock Offering With $46 Billion Bids, Oversubscribed 38 Times in a Day

 On Friday, a public offering by meal delivery company Zomato received bids totaling $46.3 billion (approximately Rs. 3.46 lakh crores) and was more than 38 times oversubscribed, indicating that investors were positive on the fast-growing sector.

Zomato's $1.3 billion (about Rs. 9,738 crores) IPO, sponsored by China's Ant Group, was the first in India's food delivery business. It was priced between Rs. 72 and Rs. 76 per share, giving it a market capitalization of up to $7.98 billion (roughly Rs. 59,780 crores).

Big institutional investors also made big bets, with subscriptions for their category reaching 52 times the number of shares on sale, according to stock market statistics after subscriptions ended on Friday.

"There is a lot of enthusiasm and tremendous demand," said Jimenez Modi, founder of Indian brokerage Samco Securities. "Retail investors are looking at this from the standpoint of listing gains."

Investors are betting on Zomato even though the company warned in its IPO draught prospectus that its costs and losses would continue to increase as it ramped up spending.

Before the IPO, Zomato collected $562 million (approximately Rs. 4,210 crores) from 186 major financial investors, including Tiger Global, BlackRock, JPMorgan, and Morgan Stanley.

The Zomato IPO comes at a time when India's markets are nearing all-time highs and digital businesses are more interested in listing on bourses.

App for financial payments sponsored by Alibaba Paytm filed draught paperwork for a $2.2 billion (approximately Rs. 16,480 crores) IPO in India on Friday, while Walmart's e-commerce behemoth Flipkart is also considering one.

Zomato, like DoorDash in the United States, is primarily a meal delivery service, having collaborated with 350,000 eateries and cafés in 526 Indian cities. Customers may also reserve tables for in-restaurant eating, submit meal reviews, and upload photographs.

Zomato competes with local rival Swiggy, which is sponsored by Softbank, and Amazon's still-in-the-works meal delivery service in a food delivery industry that Boston Consulting Group predicts will reach $8 billion by 2023, up from $4 billion (approximately Rs. 29,965 crores) last year.

According to the draught IPO prospectus, the Zomato app has 41.5 million subscribers who use its service every month, and orders on its platform increased to 403.1 million in 2019-2020, up from 30.6 million in 2017-2018.

While there is considerable investor interest in the Zomato IPO, some analysts believe the firm's values are too high, especially given that the company does not generate a profit.

In a research report, Himanshu Nayyar, an analyst with India's Yes Securities, stated that Zomato's IPO pricing range was "very costly," since "its road to profitability is still not apparent."

According to the research report, Zomato is valued at an enterprise value of 25 times revenues for 2021, compared to similar worldwide rivals, which are valued at an average of 10 times.

WANT TO RANK TOP ON GOOGLE: https://bit.ly/2TbXtZc