Home / Markets / Ipo /  What Zerodha's co-founder has to say about Zomato IPO

Commenting on the Zomato initial public offering (IPO) that is set to open today for subscription, Nikhil Kamath, Co-founder and CIO of True Beacon and Zerodha said that he is looking forward for the IPO as it is first of a kind in the Indian markets, in the food delivery and restaurant aggregator space.

''I feel markets are always ready to accept and accommodate good business, everything depends on how the company sustains its growth and profits going forward. The present time post Covid 2nd wave looks conducive for the IPO’s,'' Kamath added.

Zomato's three-day IPO will open on July 14 with the price band fixed at 72-76 per share. It will close on July 16 and the shares are expected to list on the stock exchanges on July 27. The issue comprises an offer for sale of 375 crore by the company’s early investor—Info Edge—and a fresh issue worth 9,000 crore.

''The average order value of food delivery is consistently growing at 10% for last 2 years for the company with good market share. However, Zomato's valuation at 25x FY21 EV/sales versus 10x for global peers and 12x for Indian QSRs look on expensive the side. But, the listed peer groups of the world also trade at hefty valuations even though no profits are generated, they can sustain those market valuations based on user experience, market position and tech platforms,'' Kamath added.

He believes that the Zomato IPO will pave way for other Indian start-ups to go for IPOs in Indian markets, as Indian markets are the best platform for all the stakeholders i.e., company, investors and customers. ''The market mechanism brings out the efficiency across all boards and is always forward looking in terms of growth and sustainability,'' Nikhil added.

The online food delivery platform Zomato on Tuesday said that it has raised 4,196 crore from several prominent institutional investors as part of an anchor book allocation, a day ahead of its public offering.

The IPO, which will raise 9,350 crore at the top of the price band of 72-76, is one of the largest issues in India after the covid outbreak last year. At this price, Zomato will be valued at 59,623 crore, ranking 78th among listed firms in India by market value.

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