Zomato Delivers a Hot Listing. Did You Grab a Bite?

Zomato shares have made a stellar debut on the bourses after the share listing was advanced from the scheduled 27 July.

The shares of the food startup opened at Rs 116 on the NSE, a 52.6% premium to its final offer price of Rs 76.

The listing price on the BSE was at Rs 115, up 51.3%.

Ahead of the listing, Deepinder Goyal, Founder, Zomato had expressed optimism about the company.

In a tweet, Deepinder Goyal said,

• The future looks exciting. I don't know whether we will succeed or fail - we will surely, like always, give it our best.

Kotak Mahindra Capital, Morgan Stanley India, and Credit Suisse Securities (India) were the global coordinators and book running lead managers (BRLMs).

Link Intime India was the registrar of the issue.

Zomato market cap breaches Rs 1 tn after stellar D-Street listing

The food delivery start-up scripted history on Friday by becoming India's first unicorn to debut on the stock exchanges.

With its mega listing, Zomato entered the elite club of top 100 listed companies in value terms, with a market capitalisation of over Rs 1 tn.

At issue price, its marketcap stood nearly at Rs 650 bn. The 100th member's current marketcap is Rs 446.9 bn.

That apart, the listing was in line with analysts' expectations despite the rich valuations.

First listing in the food delivery segment, positive market sentiment, healthy demand from investors, consistency in gaining market share, and expected improved financial performance can be attributed to the debut premium.

Market participants grabbed every piece of the public offer

Zomato's Rs 93.8 bn offer had received a stupendous response from the investing community. The initial public offering (IPO) was subscribed 38.3 times.

The portion reserved for qualified institutional buyers (QIB) was subscribed 51.8 times, non-institutional investors attracted 33 times subscription and retail segment, 7.5 times.

The restaurant aggregator and food delivery company's primary market offering consisted of a fresh issue of Rs 90 bn and an offer for sale of Rs 3.8 bn by the promoter, Info Edge India.

The anchor book had also garnered a strong response ahead of the IPO. Zomato raised Rs 42 bn from 186 anchor investors, including New World Fund Inc, American Funds, Tiger Global Investments Fund, and BlackRock Global.

What Zomato CEO said about rival Swiggy in his letter to shareholders

Ahead of its much-anticipated stock market debut on Friday, Zomato founder and CEO Deepinder Goyal shared a letter that he has written to shareholders in a blog post because he wanted to share something with the shareholders as well as India's startup ecosystem, on the day of Zomato's listing.

In his letter, Goyal mentioned rival Swiggy, talking about how he believes Zomato and Swiggy are two of the best food delivery apps in the world.

'India is a tough market to operate in, but if you are building to succeed in India, you are already exceptional. I say that because I believe Zomato and Swiggy are two of the best food delivery apps in the world today. We have a long way to go before we can call ourselves world class by our customers' standards, but we are determined to get there,' he said.

Swiggy recently said that it has raised US$1.3 bn from investors, including SoftBank and Prosus, nearly matching the funds raised by rival Zomato in an IPO, as the two companies battle to dominate India's food delivery market.

To read the full letter, please click here: Letter from Deepi

Financial snapshot and company's reach across India

A leading online food aggregator, Zomato offers a platform for connecting consumers with restaurants.

On average, 32.1 m monthly active users (MAUs) visited the Zomato platform in the financial year 2021.

The company has a presence in 525 cities and has 3.9 lakh active restaurant listings.

It also had 1.7 lakh active delivery partners as of March 31. Other than India, the company has footprints across 23 countries.

Despite Zomato gaining significant scale in terms of revenue by clocking 62% annual growth over the financial year 2018-2021, the company continues to incur losses.

The company's losses widened from Rs 1.1 bn in 2018 to Rs 23.9 bn in 2020. It's burning cash to get a strong foothold in the market.

While the loss is primarily on account of high expenses, it has resulted in negative cash reserves for the company, rendering a poor return on capital employed (ROCE).

However, the company's sales have grown consistently. Zomato reported a 465% jump in total revenue from Rs 4.6 bn in 2018 to Rs 26 bn in 2020.

Its orders have also grown from 30.6 m in 2018 to 403.1 m in 2020.

Zomato Financials (2016-2020)

For more details on the company's financials, check out Zomato's Red Herring Prospectus.

Zomato GMP surges ahead of listing

Online food service major's share price in the grey market was available at a premium of Rs 23 yesterday.

According to the market observers, Zomato IPO grey market premium (GMP) has been continuously rising since 14 July 2021.

Zomato's share prices logged a 130% gain in the grey market ahead of its listing.

About Zomato

Zomato is a technology platform that connects customers, restaurant partners and delivery partners, serving their multiple needs.

Customers use the platform to search and discover restaurants, read and write customer-generated reviews, order food delivery, book a table, and make payments while dining out at restaurants.

On the other hand, the platform provides restaurant partners with industry-specific marketing tools which enable them to engage and acquire customers to grow their business while also providing a reliable and efficient last-mile delivery service.

It also operates a one-stop procurement solution, Hyperpure, which supplies high-quality ingredients and kitchen products to restaurant partners.

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