Food delivery company Zomato’s IPO date has been fixed. The issue of the company will open from July 19-22. The price of one share can be fixed at Rs 70 to 72. The issue will open for 4 days from the date of Bakrid on July 21. The company will raise Rs 9,375 crore through this.
Face value will be Rs.1
The face value of its shares will be Rs. 25% share is reserved for Retail and High Net Worth Individuals i.e. HNIs. According to the upper value i.e. 72 rupees, the valuation of the company is 56 thousand 200 crore rupees. Zomato had submitted a draft to SEBI in April for the IPO and it was approved last week.
These are its shareholders
Its other shareholders are Uber, Alipay, Antfin Singapore, Internet Fund, SCI Growth Investments and its co-founder Dipinder Goyal. All hold more than 6-6% stake. By the way, there is not much demand for its shares in the unlisted market i.e. gray market. It is trading only around Rs 78 in gray market. That is, there is business at 10-12% more. From this it is also not expected to have good listing and profit.
Shares were sold at Rs 55-60
Zomato recently raised money by selling shares at a price of Rs 55-60. Then its valuation was 40 thousand crores. Right now it is Rs 56 thousand crores. The company will spend Rs 5,625 crore from the IPO money to grow the company and buy other companies. Its total revenue was Rs 487 crore in the financial year 2018 which increased to Rs 2,743 crore in 2020-21. It is in loss of Rs 2,385 crore. They also have investments in Zomato.
Second biggest issue in four years
This is the second largest IPO in the last four years. Earlier last year SBI Cards raised Rs 10,355 crore and before that in 2017 General Insurance (GIC) raised Rs 11,176 crore. Zomato’s IPO will have a primary sale of Rs 9,000 crore, while there will be a share offer for sale of Rs 375 crore. Offer for sale means other shareholders will sell their shares in the company.
Why is Zomato proposing an IPO in the middle of the pandemic?
While the pandemic has hit the services sector, particularly the hospitality segment, severely, consumer internet companies like Zomato witnessed an improvement in business after the initial lockdown last year.
According to the company’s filings, the gross order value on its platform fell to Rs 1,093.63 crore for the April-June 2020 quarter from Rs 2,684.91 crore in January-March 2020 quarter. It then rose to Rs 2,981 crore during October-December 2020 quarter, higher than the same quarter in the previous year. Furthermore, the first nine months of financial year 2020-21 show an improvement in unit economics of Zomato’s business, with commissions and delivery charges increasing compared to 2019-20, and discounts falling greatly.