Zomato IPO GMP: In the grey market, Zomato shares are available at a premium of ₹10, which is higher from its previous day's premium of ₹8.75 to ₹9
Zomato IPO (Initial Public Offering) has been subscribed 4.8 times by 15th July 2021 and today is the last date for bidding for the public issue. In the grey market, Zomato shares are available at a premium of ₹10, which is higher from its previous day's premium of ₹8.75 to ₹9. According to market observers, this rise in Zomato IPO GMP today can be attributed to the public issue's subscription in first two days. They went on to add that the rise in Zomato IPO grey market premium today is a good sign for the company promoters as potential bidders take GMP as one of the major indicators of the IPO success or failure while making any investment decision in regard to an IPO. They said that rise in Zomato IPO GMP may attract some extra bidders as there is still one day left for IPO subscription.
Speaking on what GMP means for the IPO bidders Avinash Gorakshkar, Head of Research at Profitmart Securities said, "GMP of an IPO is expected listing gain expected by the grey market in short-term. The grey market involves those people too, whose money is at stake in the IPO. Hence, a bidder is advised to look at the financials of the company instead of relying on the GMP only. In fact, it's financials, that decides fate of a public issue and if we look at the financial of Zomato, it is also sound as it has limited competitor in normal circumstances. However, there can be new competitors chipping in future but that should not be the cause of concern today."
Zomato IPO: Expected listing gain
So, on the basis of Avinash Gorakshkar's views on IPO GMP, ₹10 GMP for Zomato IPO means the market is expecting Zomato IPO listing at around ₹82 to ₹86 against its issue price of ₹72 to ₹76. That means the market is expecting around 13 per cent listing gains from Zomato IPO.
Speaking on the fundamentals of Zomato IPO; Himanshu Nayyar, Lead Analyst – Institutional Equities, Yes Securities said, "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. While growth potential and a cash rich balance sheet offer immense growth potential, it’s difficult to value the stock on conventional parameters. Hence, we would advise to subscribe for listing gains only and would wait to see multiple legs of the story unfold before coming up with a more nuanced fundamental view."
On how much listing gains one can expect from Zomato IPO Avinash Gorakshkar of Profitmart Securities said, "One can expect 10 to 15 per cent listing gains from this Zomato public issue."