Zomato IPO fully subscribed on day 1; Retail investor portion oversubscribed 1.65 times

Zomato’s much-awaited initial public offering has been fully subscribed by investors on the first day of bidding. So far the IPO has been subscribed 1.07 times, led by retail investors who have oversubscribed their portion of the issue. The Rs 9,375 crore IPO opened for subscription today morning after having raised Rs 4,200 crore from anchor investors. Investors can still bid for the public issue at the set price range of Rs 72-76 per share, till Friday evening. Zomato, the homegrown food delivery unicorn, would be the first of many Indian tech startups that are expected to list on the stock exchanges soon.

While retail investors were the first to fully subscribe to the issue, Qualified Institutional Buyers (QIB) have so far bid for 98% of the portion reserved for them and Non-Institutional Investors (NII) have bid for 12% of the reserved portion. Employees of Zomato have subscribed 18% of their portion. 75% of the issue is reserved for QIBs, while 15% is for NIIs and the remaining 10% for retail investors. 

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“The company is going to list at a P/S (Price to Sales) of 29.9X based on its FY21 sales with a market cap of Rs 5,96,234 million. As there are no listed peers in India so valuations cannot be compared on a relative basis,” said analysts at Quote on IPO Zomato Ltd. by Marwadi Shares and Finance Limited. “We recommend to “Subscribe” this IPO as the company is one of the leading foodservice platforms in India having recognized consumer brand equity and is well placed to capitalize on the large market opportunity available in India,” they added.

Analysts at ICICI Direct believe that Zomato offers strong growth potential, which at present is evolving on the back of favourable macroeconomics, changing demographic profile, and rising adoption of tech infrastructure. ICICI Direct added that India’s foodservice market will grow to Rs 7.7 lakh crore in the next five years — a massive opportunity for Zomato.

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 The much-awaited Zomato IPO is seeing massive interest from all pockets of investors. Ahead of the IPO, the food delivery giant managed to raise Rs 4,200 crore from anchor investors, including marquee global investors such as Tiger Global, Blackrock, Government of Singapore, JP Morgan, Goldman Sachs, and Morgan Stanley.