Zomato’s Stellar Stock Market Debut Sets Pace for Other Tech Listings

Indian meals supply agency Zomato surged 65.8 % in its inventory market debut on Friday, giving the startup a valuation of Rs. 98,849 crores ($13.28 billion) and setting the stage for different home startups which can be ready within the wings with itemizing plans of their very own.

The 13-year-old firm belongs to the primary era of huge dwelling grown startups within the nation to go public efficiently on Indian bourses.

“Zomato is definitely a big event for the startup community, and for the other technology companies that are waiting to come to the capital market,” stated Siddhartha Khemka, head of retail analysis, broking & distribution at Motilal Oswal Financial Services.

Berkshire Hathaway-backed Paytm, hospitality firm Oyo Hotels and ride-hailing agency Ola, each backed by SoftBank, are amongst different Indian startups set to enter markets.

Like US-based DoorDash, Zomato is principally a meals supply app, having partnered with about 390,000 eating places and cafes in 525 Indian cities. It additionally permits prospects to guide tables for dining-in, write meals evaluations and add pictures.

Zomato’s opening worth of Rs. 116, a 53 % premium to the supply worth of Rs. 76, was the second finest performer amongst Indian listings of not less than $500 million, after Power Grid, which gained 73 % at open on its first buying and selling day in 2007.

Like most different startups, the Gurugram-based firm is but to make a revenue. It has stated it would use the cash raised from its itemizing to higher its supply infrastructure and purchase extra customers. The firm competes with SoftBank-backed Swiggy and Amazon’s meals supply service.

Long time period objectives
Thirty-eight 12 months previous founder Deepinder Goyal, an engineer from the esteemed Indian Institute of Technology in Delhi, stated the “tremendous response to our IPO gives us the confidence that the world is full of investors who appreciate the magnitude of investments we are making, and take a long term view of our business.”

Analysts agreed, hailing the success of the IPO as a testomony to altering urge for food by buyers and a capability to help risk-taking.

“The market is showing some maturity by trying to understand and value such companies which are non-traditional, both in terms of the business that they do and in terms of the financials they offer,” Motilal Oswal’s Khemka stated.

China’s Ant Group holds a 16.53 % stake in Zomato, whereas its prime shareholder with an 18.55 % stake is on-line know-how firm Info Edge (India).

Zomato’s itemizing comes after different internet-based supply startups similar to DoorDash and Deliveroo. While DoorDash had a profitable debut late final 12 months, Deliveroo flopped in March.

“Zomato doesn’t come with the baggage that dragged at the UK firm’s debut,” stated Danni Hewson, a monetary analyst with British funding platform AJ Bell.

“Growth is key here. Zomato might not be profitable but it is growing exponentially and is enviably positioned to keep that momentum.”

© Thomson Reuters 2021