Zomato IPO: Ifs and Buts

Should you invest? Let’s find out.

Food delivery giant Zomato’s IPO opens this week.

Here is everything you need to know

The Gurugram-based company will be among the first from a long list of Indian unicorn startups to launch an IPO. It will also be the first among Indian online food aggregators. The public offer is expected to take Zomato’s valuation to $9 billion.

IPO Details

Price band: ₹72 to 76 per share

Market lot: 195 shares

Tentative Details

Company Financials

Let’s discuss some Ifs and Buts

Zomato registered a loss of Rs. 106.92 Cr in 2018 followed by Rs.1010 Cr and Rs. 2385.10 Cr in consecutive years.

Shocked?

You might be thinking how can a company like Zomato which has millions of consumers and is one of the largest online food aggregator companies in India and still at loss.

Well, you guessed it right. The reason is obvious. The huge discounts it offers to us i.e. its consumers.

So, Should you invest in a company that has made huge losses in all consecutive years?

Well, I personally stay away from the companies with losses. Having said that, considering Zomato is a startup and has huge growth potential. It looks promising for long-term investors.

And the market always falls more for the future potential and less for the current situations.

There is an expectation of 30%+ returns with this IPO. If the overall market remains bullish till the date of listing.

My opinion: Short and Clear

I’m personally planning to invest in this IPO. However, I’ll make my final decision after the IPO gets open considering market sentiments further.

Latest News — 13th Jul, 2021

There is already too much hype in the market regarding Zomato IPO and to increase it further news came up yesterday that Life Insurance Corporation of India (LIC) may plan to invest in Zomato IPO.

What does that mean?

LIC is a very big investor. And if the above news is true it’ll be very positive for the Zomato IPO and simply make it more attractive.

So, is it just to create more hype in the market or actually true?

Let’s find out.

As we see history, LIC usually invests either in Government projects when there is any demerger takes place or buy stake directly from the secondary market. LIC usually doesn’t invest in the IPO market.

Therefore, as I expected as per the latest updates received from LIC. LIC has no plan to invest in the Zomato IPO as of now.

Final Decision — 15th Jul, 2021

Let’s check out the subscription status till today.

Subscription status (Day 2)

QIB and Retail category is already subscribed more than 7 and 4.7 times resp. which is beyond my expectation. One of the main reasons for this is also the overpromotion and hype created for this IPO on social media.

If we talk about my personal final decision then being an aggressive investor, I’m applying for this IPO.

This is not an IPO where I can blindly say that it will give us XYZ returns. Also, it is riskier compare to another upcoming Tatva Chintan Pharma IPO which we will review in detail as wellThat being said, overall I’m positive about this IPO.

That’s all. See you next time 🙂

What’s your opinion?

About the author

Divyansh Singh

Talks about #technology #innovation #investing and #business.

View all posts

3 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *