Food delivery services pioneer Zomato enjoyed a successful listing, which is being hailed as a tribute to Indian entrepreneurship. Zomato had a stellar opening as the stock jumped over 53% over its IPO price of Rs 76 on debut to quote at Rs 115. After hitting an intra-day high of Rs 138 on the BSE, the stock finally closed at Rs 126, giving the company a market valuation of £9.87 billion, ahead of traditional giants like Tata Motors, M&M and Coal India.
Zomato’s strong debut also proved a lot of Dalal Street pundits and doubters wrong who had questioned the new-age company’s pre-IPO valuation of £6 billion. Even those who believed in the loss-making company’s valuation then, were expecting its listing gain to be limited at 25%-30%. On July 16, the company had closed its IPO bidding process with an over 38 times oversubscription and advanced its listing date by at least four days to Friday.
S Ramesh, MD & CEO, Kotak Mahindra Capital Company, one of the merchant bankers that took the company public, said such a strong market debut was a testimony to the fact that investors “are willing to bet big on new-age technology companies which have the characteristics of a disruptive business model”.
“With growing internet penetration and the number of smartphone user base increasing month after month, the entire private digital ecosystem will enable wealth creation and further deepen our capital market in the coming years,” Ramesh added. Market veterans said in 1993, the IPO of Infosys was on the verge of being withdrawn till a clutch of market veterans recognised its future growth prospects and bailed it out. The rest, as they say, is history. Over the last 30 years, Infosys has ranked among the top wealth creators in the Indian market.
Zomato’s success would give confidence to new-age tech companies planning to go public, along with their merchant bankers, to move ahead, industry players said. Digital payment solutions companies PayTM and Mobikwik, online auto classified company CarTrade and ecommerce logistics startup Delhivery have already filed for IPOs. There are also a host of other such tech-enabled companies in their late stage of PE-driven growth for which Zomato was a test-case. All these companies are likely to rush to D Street to go public, they added.