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Home >Opinion >Views >India's FAANG moment has arrived

Over a decade back, Deepinder Goyal and Pankaj Chaddha, two enthusiastic promoters of a little heard company, proclaimed luck as one of the three biggest factors in their journey thus far; the other two being the right kind of talent in their team and establishment of a deep customer connect.

Deep discounts and controversies aside, we have a beautiful and compelling story this morning as Zomato gets listed for public trading of its shares. The first among a host of domestic unicorns to have taken the uncharted road, heralding not only a watershed moment for its excited though slightly nervous brethren, but also a big leap for our country as a whole, which today boasts of the third largest start-up ecosystem in the world.

At a valuation of over 64,000 crore, post-listing, Zomato would be valued nearly two times its nearest competitor, Swiggy. The response to Zomato's initial public offer (IPO) gave us interesting insights into the robustness of the online economy in a pandemic-stricken world where urban consumers are increasingly taking to convenience.

With other heavyweights like Paytm, which has filed for the largest IPO from enthusiastic investors and scores of other household names like Oyo, Nykaa, Delhivery and many others ready to follow suit, it could alter the composition as well as perception of markets, giving Indian investors a feel of new-generation, tech-heavy, assets-light and agile entrepreneurial growth stories, woven around the consumer internet ecosystem in India. With their reliance on big data and leveraging of ever-evolving technology, while sustaining a two-way connect with clients, one would hope that these entities would, over a period of time, outperform benchmark indices like Nasdaq, which has seen such companies' value soar in a turbulent period.

The horizon may be unclear, but it still offers a hazy yet subtly affirmative glimpse of what lies in the future as start-ups charge ahead with a gladiatorial spirit unseen since the frenzied days of the dotcom era. The ascent of new-age enterprises like Zomato and Paytm on Dalal Street, followed by likes of Oyo, Ola, Swiggy, Byju’s and even Flipkart (and, who knows if the local arm of Amazon gets listed at GIFT city separately with a new class of shares) could signal the emergence of India’s own FAANG family. In the US, the Big Tech FAANG five are Facebook, Apple, Amazon, Netflix and Google (now Alphabet). Today, in India, we start with the first alphabet of our own equivalent: Z.

The value accretion to shareholders could be phenomenal, but it would be the ripple effect on the ecosystem that could turn out to be historic in hindsight.

With nearly 30 million average active monthly users, it’s not what the food delivery company has achieved so far that has got the market excited, as evident in its IPO's over-subscription numbers. Rather, it is what Zomato can achieve going forward, leveraging stickiness with its customers, offering them convenience in multiple ways, from grocery and logistics to the drone-based delivery of curated and inspired products, which is whetting the appetite of investors.

The ‘stickiness’ and the ‘connect’ built over the years through carefully fabricated social layers puts it and its cohorts in the league of giant social media influencers, who could handhold customers, softly telling them what to buy and what not to, through a 360-degree online experience.

During the last few decades, two distinctive traits that have the potential to push the boundaries of limitations are creation of a large talent pool and India’s prowess in software and data (including AI/ML) technology, both on a global scale. Today, from Silicon Valley to Wall Street, it’s the Indian diaspora that is mostly writing the source codes of innovation and investment. Could this mega listing be the spark, re-igniting a longing among the homesick to return, thus initiating a ‘reverse’ brain drain? At least collaborations that could see Silicon Valley 'Bangalored'?

Could these online startups, with their revolutionary aggregator and assembler-based models, create value the same way that their IT bellwethers did in the early 90s, ushering in a revolution that changed the very way the world looked at us, tilting the Balance of Perceptions irrevocably?

With presence in 24 countries overseas, the one-time Delhi based restaurant menu aggregator has surely come a long way. We should cheer on as Zomato rings its debut bell for trading. This is the entrepreneurship that should make us proud and pave the way for an economic surge that may help India emerge as a 'superpower'.

Zomato also deserves credit for giving scores of unicorns and soonicorns the conviction to tread the choppy rivers of D-street. For giving marquee investors another reason to believe the India story and loosen purse strings, which could spark a sort of revolution as bright passionate people from B and C category towns dare to dream, giving a fillip to Atmanirbhar Bharat. With global liquidity at unprecedented levels and tech being the toast of the season, we could be looking at FDI inflows in unforeseen proportion in days to come.

Our entrepreneurs have displayed 'josh' (enthusiasm). Capital has been provided with 'hosh' (awareness) by eager investors, and in good measure. We must combine josh and hosh to move ahead.

As we celebrate 30 years of economic reforms, today’s debut, at least for the markets and the economy, may well be called India’s re-tryst with destiny. As we enter the 75th year of our freedom, most of which have been used painstakingly to assemble the building blocks for a rock-solid foundation, it’s time to cheer Zomato's listing.

Ashwani Bhatia is managing director, corporate banking & global markets, State Bank of India


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