Zomato IPO: Should you buy Zomato Stock or not
We all know Zomato, the food delivery giant. Zomato IPO was launched on 14th July and closed on 16th July. The IPO listing date was 23rd July on Friday. The IPO size was ₹9375 Cr, But it crossed the ₹1 lakh Cr market cap mark and became the top 50 most valuable companies on the BSE. In this article, we will answer the question should you buy Zomato Share post IPO?
Zomato IPO Details
| IPO Opening Date | Jul 14, 2021 |
| IPO Closing Date | Jul 16, 2021 |
| Issue Type | Book Built Issue IPO |
| Face Value | ₹1 per equity share |
| IPO Price | ₹72 to ₹76 per equity share |
| Market Lot | 195 Shares |
| Min Order Quantity | 195 Shares |
| Listing At | BSE, NSE |
| Issue Size | [.] Eq Shares of ₹1 (aggregating up to ₹9,375.00 Cr) |
| Fresh Issue | [.] Eq Shares of ₹1 (aggregating up to ₹9,000.00 Cr) |
| Offer for Sale | [.] Eq Shares of ₹1 (aggregating up to ₹375.00 Cr) |
Zomato Share IPO Lot Size
The Zomato IPO market lot size is 195 shares. A retail-individual investor can apply for up to 13 lots (2535 shares or ₹192,660).
| Application | Lots | Shares | Amount (Cut-off) |
|---|---|---|---|
| Minimum | 1 | 195 | ₹14,820 |
| Maximum | 13 | 2535 | ₹192,660 |
Listing Day Trading Information
| Title | NSE | BSE |
|---|---|---|
| IPO Price | ₹76.00 | ₹76.00 |
| Opening Price | ₹116.00 | ₹115.00 |
| Closing price | ₹126.00 | ₹125.85 |
| Low | ₹115.00 | ₹114.00 |
| High | ₹139.90 | ₹138.00 |
| Volume | 69,48,95,290 | 45,171,382 |
The Luck ones who got allotment in IPO are having a 50% benefits on their investment
Let’s see some details about Zomato
- It was started in 2008 as Foodiebay and in 2010 it was renamed Zomato Media Pvt. Ltd.
- Zomato Got its initial round of funding from 2010 to 2013 which was approximately $16.7 Million from Info Edge India.
- November 2013 they raised an additional $37 Million from Sequoia Capital and Info Edge India
- In 2014 Zomato Completed Another round of funding of $60 million from Vy Capital, Sequoia Capital, and Info Edge India
- Zomato got a round of funding in April 2015 of $50 million from Info Edge India, Vy Capital and Sequoia Capital. This was followed by $60 million funding led by Temasek, along with Vy Capital in September
- In Oct 2018, they raised another $210 million from Alibaba’s payment affiliate Ant financial. By this point, Zomato was valued at around $2 billion.
- In September 2020, Zomato raised $62 million from Temasek. Again in Oct 2020, as a part of a Series J round of funding, they raised $52 million from Kora a US-based investment firm.
- Recent Investment was in Feb 2021 where they raised $250 million from 5 investors, including Tiger Global Management. At this point, Zomato was valued at $5.4 Billion.
Stats from Wiki.
More Details
Zomato has Acquired 12 startups globally that includes Uber eats
Zomato is not a profit-making company, it has been consistently making losses for years now. FY19 Zomato reported a loss of ₹1010 Cr, which was increased to ₹2386 Cr in FY20 due to Covid-19. But they managed to reduce the loss to ₹816.42 Cr in FY21. The order value for Zomato fell to ₹1093.63 Cr from April-June 2020 from ₹2684.91 Cr in Jan-Mar 2020. Then in Oct-Dec of 2020, it rose to ₹2981 Cr.
You can check the performance report here.
But, the IPO was an incredible success and the market cap was around 1 Lakh Cr.
So Should you invest in Zomato if you have missed IPO or were not lucky to get an IPO?
Should you Buy Zomato Share
Most of the investors say if you have the IPO, you should sell 50% of your investment and book profit, and hold another 50% of your investment for the long term. There will be a price correction which will bring down the price to around ₹100/share. I suggest withdraw the investment amount and keep the profit in the market.
Ravi Singhal Vice-chairman at GCL securities said, those who were unable to get IPO allotment, should buy above ₹100 with a stop loss of ₹90. Zomato is a long-term stock and is expected to go up to ₹190 to ₹210 by the end of 2021.
As being a small investor in the Stock market and Mutual fund, there are 2 scenarios, either the prices will straight go up from ₹126 or the prices might come down to around ₹100. I believe the latter will happen, after which they can reach up to ₹200.
So I am going to wait for tomorrow’s bell to ring then decide whether to buy Zomato share or not. If the price comes around ₹100, I would suggest buying the Zomato share.
Zomato is a long-term investment, the business model of Zomato is different and there is no competition for them in NSE, BSE. If Swiggy launches its IPO then it will be a different scenario.
Though you should buy Zomato share only after your personal research, as market investments are risky and cause a loss.
