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Home >Markets >Stock Markets >Zomato IPO: What GMP (grey market premium) signals on subscription opening date

Zomato IPO: Hunger for home-grown unicorn company Zomato's Initial Public Offering (IPO) seems to have gone down the investors in the grey market. Zomato IPO GMP (Grey Market Premium) today is around 12 per cent, which is near 8 per cent lower from its yesterday's premium of 13 to 17. According to market observers, this slide in the Zomato IPO GMP today is not good for the issue, which is opening for subscription today. As per the Red Herring Prospectus (RHP) of Zomato IPO, it's subscription will open on 14th July 2021 and it will remain open for bidding till 16th July 2021. However, the market observers maintained that GMP of an IPO is not a concrete indicator of the public issue and people would look at the financials of the company and bid strongly for the initial public offering.

Zomato IPO in grey market

Zomato IPO GMP today is 8.75 to rs 9.0 which was at 13 to 17 yesterday. However, yesterday Zomato IPO in the grey market had jumped from 12 to 16. So, if we go by the market observers' views, the expected listing of the Zomato IPO in the grey market is around 81 to 85, which is around 12 per cent higher from Zomato IPO price of 72 to 76.

Speaking on what Zomato IPO GMP reflects Avinash Gorakshkar, Head of Research at Profitmart Securities said, "GMP of an IPO is an unofficial data that bidders are taking these days as cue for the listing gains or may say success or failure of an IPO. Bidders look a the GMP of an IPO and then add it with the issue price and on the basis of that they make a prediction about the expected listing price of the IPO. But, in my view, one should look at the financials of the company for making any decision in regard to IPO subscription." Gorakshkar said that financials of Zomato is quite strong and it may witness huge jump in business post-Covid as it has limited competitor in its business.

Highlighting the fundamentals of Zomato IPO Saurabh Joshi, Research Analyst at Marwadi Shares and Finance Limited said, "The company is going to list at a P/S (Price to Sales) multiple of 29.9 based on its FY21 sales with a market cap of 5,96,234 million. As there are no listed peers in India, so valuations cannot be compared on a relative basis. We recommend to subscribe this IPO as the company is one of the leading food service platforms in India having recognized consumer brand equity and is well placed to capitalize on the large market opportunity available in India."

Asked about the listing gains one can expect from Zomato IPO Avinash Gorakshkar of Profitmart Securities said, “One can expect 10-15 per cent listing gains from the IPO as its business model reflects rise in volume as the company has limited competitor once the market comes out of the Covid-19 fear."

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