In the gray-market too, a stir has started regarding the company’s IPO. In the gray market, the shares of Zomato are trading at a premium of Rs 14, that is, around Rs 90.
About the IPO
The size of Zomato’s IPO is Rs 9,375 crore. According to Zomato, this includes new shares worth Rs 9,000 crore and an offer-for-sale (OFS) of Rs 375 crore by Info Edge (India).
According to the IPO papers, the money raised from this issue will be used for the growth of the company and for meeting its general corporate needs.
According to experts, after the completion of the IPO, the valuation of the company will be Rs 64,365 crore, which is much higher than the other listed companies in this segment. The capitalization of Jubilant Foodworks is around Rs 41 thousand crore while that of Burger King India is Rs 6,627 crore. The online food delivery market has been growing rapidly in the last few years. Zomato and Swiggy are the major companies in this sector.
In FY20, Zomato’s income doubled to Rs 2,960 crore compared to the previous financial year, while EBITDA loss stood at Rs 2,200 crore. In February, the company had raised around Rs 1,800 crore from Tiger Global, Quora and other firms. In this way the valuation of the company became about 40 thousand crores.
IPO Lead Manager
Kotak Mahindra Capital, Morgan Stanley India, Credit Suisse Securities are the Global Coordinators and Lead Managers of the issue. BofA Securities and Citigroup are global market merchant bankers.
gray market premium
Unlisted Arena’s founder Abhay Doshi told Money9 that Zomato is trading at a premium of Rs 13.40 to Rs 14 in the gray market.
Should you subscribe to it?
Brokerage Ventura Securities has advised to subscribe to this issue. It says that smartphones are growing rapidly in the country and the lifestyle of people is such that they are taking interest in ordering food online.
Ventura also believes that Zomato can make a profit of Rs 227 crore in FY 2023 and Rs 479 crore in FY 2024. However, the company has incurred losses of Rs 2304 crore, Rs 816 crore and Rs 577 crore for the last three years.