Zomato IPO this week: Should you subscribe? What brokerages say1 min read . Updated: 12 Jul 2021, 03:48 PM IST
- The listing of Zomato shares is likely by July 27
India’s largest online food ordering platform is looking to raise as much as ₹9,375 crore in the public issue. Zomato's initial public offering (IPO) will open for subscription on 14 July and the shares are priced between ₹72 and ₹76 apiece. The issue, which closes on 16 July, comprises an offer for sale of ₹375 crore by the company’s early investor—Info Edge—and a fresh issue worth ₹9,000 crore.
As per market observers, Zomato grey market premium (GMP) has seen a dip as it is trading in the range of ₹7.75-8.25, which is around 10% over upper end of the IPO price band of ₹76. The grey market is an unofficial platform, wherein trading starts after the announcement of IPO price band till the listing of IPO shares. The listing is likely by July 27.
Brokerage views on the IPO -
Motilal Oswal: Zomato with first mover advantage is placed in a sweet spot as the online food delivery market is at the cusp of evolution.. However, the brokerage said that predicting the growth trajectory at this juncture is little tricky for next few years. Valuing such early stage businesses on plain vanilla financial matrix might not give the right picture and may look distorted. ''Investors with high risk appetite can Subscribe for Listing Gains given fancy for unique and first of its kind listing in the food delivery business.''
ICICI Direct: ''Zomato is yet to turn profitable. However, this new-age digital platform offers strong growth potential, which at present is evolving on the back of favourable macroeconomics, changing demographic profile, rising adoption of tech infrastructure. Hence, we recommend Subscribe to this IPO.''
Choice Broking: Currently, the company is loss making. Also, there is no listed domestic peer having same line of business as the company. The company has certain positivities like asset light scalable business model, expanded target market post the pandemic, first mover advantage in food delivery business etc. But its operations in almost duopoly market may attract regulatory actions, which would be negative for the company, the brokerage said.
''We feel that this IPO is not for retail investor, but investors with higher risk appetite with long term investment horizon can apply. Thus we assign a “Subscribe with Caution" rating for the issue,'' it added.
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