Hello friends, Zomato IPO is finally here. This much awaited IPO will be from 14th July to 16th July and if you want to invest in Zomato IPO or want to know better about IPO then read this post till the end.
In this article, we Zomato IPO Let’s go a little deeper and analyze its IPO, what is the status of Zomato IPO.
A detailed description about Zomato:
Zomato Limited is one of the leading online food service platforms in India. It connects customers, restaurants and delivery partners.
Professional performance of Zomato:
The company has been making a lot of losses since its inception, if the figures are seen. Zomato’s ambitious expansion plans have taken a toll on their financial performance. It spends crores of rupees in advertising and promotional activities to boost customer growth and will have to do more. They incur heavy customer acquisition costs for consistently offering discounts and referral bonuses. However, the company has registered an increase in Average Order Value (AOV) during the pandemic. AOV increased from Rs 264 in March-June 2019 to around Rs 400 in Q4 2020. Many Indians have spent more on ordering their favorite food/beverages during the lockdown. Unfortunately, there was still a big drop in the total number of orders over the course of a few months.
In the last three years, Zomato has posted negative Average Earnings Per Share (EPS) of Rs. Many investors/analysts are planning to stay away from IPOs due to poor financial performance.
If you do not know how to buy IPO, then you must read this post – What is IPO, how many types and how to buy IPO?
Zomato IPO Subscription Status Live:
The IPO includes a fresh issue of Rs 9,000 crore by the company and an offer for sale of Rs 375 crore by Info Edge, the current largest shareholder. The price band for the offer has been fixed at Rs 72-76 per equity share.
Zomato secured almost half of its issue size of about $560 million from institutional investors at the upper end of the price band of Rs 76/share.
Zomato IPO Update:
Zomato, one of the leading food service platforms in India, got subscribed 4.79 times on July 15, the second day of its initial public offering (IPO) bidding. The subscription data available on the exchanges shows that the offer has received bids for 344.76 crore equity shares against the IPO size of 71.92 crore equity shares.
Retail investors are at the fore as their reserves have been subscribed 4.73 times, while non-institutional investors have bid 45 per cent against their reserves. The share earmarked for employees is 36 per cent and subscribed 7.06 times for qualified institutional buyers.
Arihant Capital Markets says that at an upper price band of Rs 76, the issue has a market cap/sales of 29.9 times its offered sales of Rs 1,994 crore in FY21. The company does not have any listed counterparties.
What does Zomato offer to its customers?
- Basic listing is free for restaurant partners, helping restaurant partners drive demand for food delivery and dining out.
- Meals delivered by delivery partners to customers reliably and quickly.
- Offers brand marketing, sales and promotional campaigns to help target high-intent customers who are looking for food delivery and services provided by restaurant partners.
- Provides restaurant partners with multiple tools, including analytics, dashboards, table reservations and payment processing, etc., to help them run their business optimally.
KR Choksey Shares & Securities Pvt Ltd believes that Zomato is valued at around $9 billion, given the status of a company that has not yet made any profits. However, it is the first start-up in the Indian food aggregator space to be listed on the exchanges and the enthusiasm among investors about IPO is overwhelming. Also, the company enjoys a unique status of unicorn in Indian food.
What are the downsides to be aware of while buying Zomato’s IPO?
- Zomato has expanded and grown tremendously over the years. However, the company has said that it may not be able to maintain its historical growth rate. Also, its historical performance may not be indicative of its future growth and financial results.
- The company has incurred huge losses in the last three financial years. It expects further increase in costs and losses in future as well. Zomato’s overall financial performance and operations may be adversely impacted if they are unable to increase revenue, manage costs and maintain adequate cash flow.
- The COVID-19 pandemic had severely affected the company’s food delivery business and food and beverage services. Most of the restaurants were temporarily closed due to the strict lockdown. Similar health hazards may further affect its financial results in the future.
- Zomato’s business will be negatively affected if they fail to retain the existing restaurant partners or food delivery partners. They will also need to focus on adding new customers, restaurant partners and distribution partners in a cost-effective manner.
- They face intense competition in food delivery and other businesses. Apart from Zomato, localized food delivery apps like Swiggy, Uber Eats, Foodpanda etc are gaining popularity across India. Zomato will need to maintain quality and competitive rates to retain customers.
Should I invest in Zomato IPO or not?
Nothing can be said completely on this subject as it has no listed equivalent in India. Apart from this, many investors are also casting doubt on its IPO due to its dismal financial condition. And on the other hand Amazon is also looking to enter the Indian food delivery space, according to sources, which means more competition for Zomato. Over the years, several of its global acquisitions have failed to deliver results, and the company is yet to break into international markets. As we can see, there are a lot of uncertainties regarding Zomato. The GMP of Zomato’s IPO shares was reduced to Rs 7.75 or 10% on July 13 (Tuesday).
Economic experts advise that only those who want to invest in Zomato for a long time should think about IPO and anyway applying for IPO is a completely personal decision, and if you are planning to take IPO. If so, make sure you carefully evaluate the pros and cons.
If you want to know how to invest in Zomato IPO, then this post of ours will be helpful for you- How to Buy Shares of Zomato IPO?
Hopefully, through this post, you must have understood well about investing in Zomato IPO and what is the status of Zomato IPO. What is your opinion on Zomato’s IPO? Would you apply for this? Do let us know by commenting and share the post Thank you.