Zomato IPO : Should you subscribe?

Zomato IPO : Should you subscribe?

The Zomato IPO opens for subscription on 14th July 2021. The Zomato IPO will be the biggest IPO till date this year.

About the company

Well, Zomato does not really need any introduction, does it? Zomato was launched in 2010. It is a technology platform that connects customers, restaurant partners and delivery partners, thereby serving their needs. Customers can order food, give reviews and post photos about a restaurant among other things. Restaurant partners are provided with the right marketing tools and insights and last mile coverage. Delivery partners are provided with earning opportuinities.

Zomato IPO details

Size of IPO : ₹9,375 crores (₹9,000 crores of fresh issue ; ₹375 crores Offer for Sale from shareholder Info Edge)

Subscription dates : 14th July 2021 to 16th July 2021

Price band : ₹72 to ₹76

Lot Size : 195 shares per lot

Value of 1 lot : ₹14,820 per lot at the upper price band of ₹76

Maximum lots per person : A retail investor can apply for 13 lots. This would cost ₹192,660.

What do experts say about the Zomato IPO?

“The IPO is valued at price-to-sales of 28.6-29.9 times FY21 revenues of Rs 1,993 crore, which is at a premium to other comparable global food delivery companies. While the Zomato IPO may seem expensive based on FY21 numbers, we believe that FY21 was an aberration as business was impacted significantly due to the first Covid wave and the ensuing lockdowns,” – Jyoti Roy,DVP-Equity Strategist, Angel Broking

Financials of Zomato

Zomato’s revenues have grown in leaps and bounds. In 2018 the revenue was 466 crores, which rose up to ₹1312 crores in 2019 and ₹2,604 crores in 2020. For the nine month period ended December 2020, the revenue stood at ₹1,301 crores. The loss for this period has been at ₹106 crores in 2018, ₹1,010 crores in 2019 and ₹2,385 crores in 2020. The loss for the nine month period ended December 2020 was ₹682 crores.

Verdict

Several analysts believe that Zomato will have listing gains, but may not be very profitable in the long run. Hence we assign “Subscribe for listing gains” to this IPO.

You can apply for the Zomato IPO here.

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