Zomato is a Validation that India Can Generate Large IPOs

Zomato’s debut was nothing short of spectacular with the stock opening at INR 116 on the National Stock Exchange (NSE)


Talks of Zomato’s IPO (Initial Public Offering) have been going around for quite a while. There was a lot of publicity, marketing and strategy involved in making the listing a grand affair. The Zomato IPO was strategically placed to create a significant buzz before going live. Apart from the heavy publicity, it had created quite the buzz among the investor fraternity since it was a large listing and the first of its kind. 

Moreover, Zomato is a popular brand which is loved by Indian youth. Their efforts seem to have paid off as the IPO was a bumper affair and has made Zomato one of the 50 most valuable publicly traded firms in India. 

Zomato went live on 23 July

Last week, Zomato put its IPO plan into action and went live with a bang. It is listed on the Indian Stock Exchanges at more than 50% premium than its issue price of INR 76. Zomato’s successful IPO listing has set a precedent for other Indian start-ups looking to follow in its wake. 

Zomato kicked off their Initial Public Offering (IPO) at $1.3 B worth INR 93.75 B. While the listing was awaited with bated breath by the industry, it was also one of the biggest start-up IPOs of India this year. Zomato’s IPO received about 40 subscriptions and received bids worth 29.04 B equity shares. Evidently, it is a flagship listing among India’s tech unicorns. 

Landmark achievement 

The food aggregator’s IPO was celebrated with much fanfare in the history of IPOs. It was received with a healthy market demand. In just the first few hours after it went live, Zomato’s IPO was subscribed almost 100% by the retail investor segment. After this IPO concludes, Zomato is expected to be valued at $8B which will be a landmark achievement that’s relevant for the entire start-up fraternity and the food tech industry as well. 

How entrepreneurs and investors watched

All eyes were on listing day as entrepreneurs and investors watched whether Zomato’s IPO would be a stellar debut or a flop. A number of brokerages had recommended subscription for Zomato’s IPO owing to long-term growth potential as well as the possibility of gains. Key stakeholders were awaiting reasonable gains. Bidders eagerly awaited the allotment date and twitter was flooded with celebratory messages from industry colleagues.

5 big Twitter celebratory messages

zomato
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Zomato’s IPO received about 40 subscriptions and received bids worth 29.04 B equity shares. Zomato’s is a flagship listing among India’s tech unicorns.

What this means to the industry

The Zomato IPO is good news for investors, VCs and start-ups since it will sharpen market demand including those coming from fellow start-ups as well as Venture Capitalists. Zomato’s IPO means more to the industry than just to the company itself. It has heralded a new era for Indian equity investors. It’s a major milestone for the private digital ecosystem. The company has now set sky high standards for the food delivery and technology industry.

Zomato IPO success – Validation that India can generate large IPOs

The success of Zomato’s IPO is concrete evidence of cross-section investor interest in internet companies. The Internet economy in India is horizontal with dynamic influence on most vertical industries right from D2C to logistics. The event will be the key to unlocking trapped value in multiple industries and entrepreneurs. 

There’s a high possibility that in this decade alone, more than 100 internet/new-age unicorns will be listed. Following Zomato, more IPOs are sure to follow from a significant number of digital technology companies. This will boost entrepreneurship, give Start-up India a leg up, enable wealth creation and deepen our capital markets. 

Zomato is currently growing exponentially across the country and its initial offering of $1.3 B means that they have reached the heights of success from where there’s no turning back. After the validation received from Zomato’s IPO’s massive success, 11 Indian start-ups are all set to take the IPO route by the end of 2021. Out of these 11 start-ups, 9 are unicorns including PayTM and Ola. These IPO bound start-ups have a bright future ahead, as investors are now willing to risk it up in Indian start-ups taking the cue from Zomato’s grand success. It has become a role model for Indian start-ups and has made the Indian capital markets open towards similar innovative business models. 

Anju Nambiar
Anju Nambiar
Anju has 5 years of experience covering business. She writes on startups, business life cycle and startup ecosystem. Her stints include Amazon and Adjetter Media Network.

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