Zomato’s initial public offering (IPO) will begin accepting subscriptions on July 14 and will be priced between Rs 72 and Rs 76 per share. The company intends to raise Rs 9,350 crore at the upper end of the offering’s pricing bracket. For listing gains, most experts have given the offering a ‘subscribe’ rating. This is the largest public offering in the Indian startup ecosystem yet, at least until digital payments firm Paytm goes public with its $3 billion offerings.
- Issue period: July 14, 2021 – July 16, 2021
- IPO Size: Rs 9,350 crore or Rs. 93.75 billion
- Price band: Rs. 72 to 76 per share
- Bid lot: A minimum lot of 195 shares is specified, with subsequent lots in multiples of 195.
Here’s how the top stockbroking institution analyzed the offer with mixed reviews:
Zomato has yet to break even. Nevertheless, this new-age digital platform has significant development potential, which is currently being realized as a result of positive monetary policy, a changing demographic profile, and increased adoption of technology infrastructure. As a result, “we propose that you subscribe to this IPO.”
IIFL Holdings Limited
Zomato is on the verge of generating profitability and value creation, thanks to a 5x sales increase, and is on track to achieve a 15 percent profitability ratio by FY25. This would be fueled by:
- A much favorable market structure for the two major companies
- a faster deployment of food delivery, boosted by the ongoing pandemic
- optimizing unit cost economics
We recommend that investors subscribe to the IPO because, based on our discounted cash flow (DCF) analysis, we anticipate Zomato may trade at over $10 billion, representing an EV/Sales of nearly 11.5x/8.0x on FY23/24 revenues, equivalent to US-listed DoorDash.
Zomato, being the first to market, is in a favorable position as the online food delivery sector evolves. Still, the stockbroker stated that projecting the growth trajectory for the next few years is difficult at this point. Valuing such early-stage enterprises on a traditional financial model may not provide the correct perspective and may appear distorted. ”Investors with a high-risk appetite can Subscribe for Listing Gains given fancy for unique and first of its kind listing in the food delivery business.”
In the fiscal year of 2021, the overall loss dropped to Rs 816 crore, down from Rs 2,385 crore the previous year. Given the company’s “substantial efforts toward growing its business,” the company expects its losses to increase. Analysts noted that Zomato’s Red Herring Prospectus (RHP) indicates a steady recovery across key operational metrics in March 2021.
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