Zomato IPO subscribed 39% on day 1 so far, retail portion booked 1.97 times
The initial public offering of Zomato, one of the leading food service platforms in India, is subscribed 39 percent on July 14, the first day of bidding, so far.
The offer has received bids for 28.36 crore equity shares against IPO size of 71.92 crore equity shares, the subscription data available on the exchanges showed.
The retail investors are at the forefront as the portion reserved for them is subscribed 1.97 times, while non-institutional investors have put in bids for 7 percent against their reserved portion.
The portion set aside for employees is subscribed 6 percent and that of qualified institutional buyers 4 percent.
It has already mobilised Rs 4,196.51 crore from 186 anchor investors on July 13, a day before the issue opening. The IPO size has been reduced to Rs 5,178.49 crore from Rs 9,375 crore earlier.
The food delivery giant will utilise fresh issue proceeds for funding organic and inorganic growth initiatives (Rs 6,750 crore); and general corporate purposes.
Zomato's technology platform connects customers, restaurant partners and delivery partners, serving their multiple needs. Zomato has two core B2C offerings, Food delivery and Dining-out in addition to the B2B offering Hyperpure. Another important part of the business is Zomato Pro, which is the customer loyalty program and encompasses both food delivery and dining-out.
As of March 2021, Zomato was present in 525 cities in India, with 3,89,932 active restaurant listings along with presence in 23 countries outside India.
"The IPO is expected to generate lot of interest given the company uniqueness, large opportunity size and some evidence of scale economies, but the valuations look really expensive on conventional parameters at 25x FY21 EV/sales versus 10x for global peers and 12x for Indian quick services restaurants (QSRs), with the path to profitability also unclear," said Yes Securities which advised subscribing IPO for listing gains.
The brokerage further said, "While the current frenzy should deliver some listing gains, we would await more clarity on capital allocation plans, competitive activity and unit economics over the next few quarters to provide a more nuanced fundamental view on the company.
