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Zomato IPO: Shares trade with strong premium in grey market on SEBI’s go-ahead to public issue

Zomato is India’s home grown unicorn company and significantly one of the most awaited IPO.

Zomato, online food delivery platform, shares were trading with a strong premium in the primary market, after the company received SEBI’s go-ahead to raise Rs 8,250 crore through an IPO. Info Edge, a key shareholder of Zomato, has reduced the size of its offer for sale (OFS) by half to Rs 375 crore from Rs 750 crore planned earlier. On Tuesday, Zomato shares were seen quoting at a premium of Rs 16.5 apiece, over the tentative price band of Rs 70-72 a share. The shares were trading at Rs 88.5 apiece, implying a premium of 23 per cent over the tentative IPO price, according to the people who deal in shares of unlisted companies.

Zomato is India’s home grown unicorn company and significantly one of the most awaited IPO. There is a lot of zeal on D-Street even before the IPO announcement. “Market is expecting a price band of Rs 70-72 for the Zomato IPO. The listing of the unicorn startup will be more in focus with respect to its valuations as the market will probably not value such companies traditionally,” Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares, told Financial Express Online. Doshi added that recently listed DoorDash Inc. on NYSE has given stellar returns to its investors while India is still in its nascent stage in this sector where there are immense growth opportunities.

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Zomato has proved to be a blessing for most of the working professionals who have a fast-paced life or for the normal people who remain at home. Zomato delivers food that is freshly prepared which many Quick Service Restaurants(QSR) lack, said an analyst. “A similar company, DoorDash Inc, was listed on NYSE in December 2020, the issue price was $ 102 and stock listed at a premium of 78 per cent, its market price reached $205.97 on 19 February 2021. We expect a similar response for Zomato,” Rajesh Singla, Founder & CEO of pre-IPO consultancy firm Planify India, told Financial Express Online.

Naukri.com’s parent company, Info Edge holds a stake of about 18.55 per cet in the food delivery platform. The offer comprises a fresh issue worth over Rs 7,000 crore. In February this year, Zomato had raised $250 million (over Rs 1,800 crore) in funding from Tiger Global, Kora and others, valuing the online food ordering platform at $5.4 billion. Zomato’s public issue is one of the most awaited IPOs of this year.

Kotak Mahindra Capital Company, Morgan Stanley India Company Pvt Ltd and Credit Suisse Securities (India) Pvt Ltd are the global coordinators and book running lead managers to the issue.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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