Shares of Zomato nearly doubled in a stellar first listing of a local unicorn in India, setting the pace for a slew of such debuts by internet-based startups that are thriving during the Covid-19 pandemic. Berkshire Hathaway Inc-backed Paytm, hospitality company Oyo Hotels and ride-hailing firm Ola, both backed by SoftBank, are among the Indian startups set to enter markets, riding on support from foreign funds and local investors. Shares of Zomato soared 82.8% after opening at Rs 116, a 53% premium to the offer price of Rs 76.
Zomato, backed by Jack Ma’s Ant Group Co, is the first from a long list of Indian unicorn startups to launch an IPO. It is also the first among Indian online food aggregators.
In the first stock market listing of an Indian startup valued at more than $1 billion, shares of food delivery firm Zomato opened at a 52.6% premium to their offer price on Friday, gaining a market valuation of about $12 billion.
Zomato shares hit 20% upper circuit at Rs 138, nearly doubling IPO investors money. The total market capitalisation of this online food ordering platform surged to Rs 1 lakh crore from listing level of Rs 90,219.57 crore.
The Rs 9,375-crore IPO was sold in a price band of Rs 74-76 a share during 14-16 July. The mega public issue of the food-tech unicorn saw a subscription of over 38 times, receiving a robust response from all pockets of investors.
Zomato’s IPO is the first Indian internet unicorn to make its stock market debut. This much-awaited public issue is the largest to hit Dalal Street since SBI Cards and Payment Services’ Rs 10,341-crore IPO in March 2020.
Meanwhile, the experts are suggesting that the key factor for the stock price to sustain this euphoria is to demonstrate improvement in profitability in the coming quarters. The company is highly expected to turn into profit from current loss, else the performance will be impacted.
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