On the last day of the bidding process, the Zomato IPO round, which took place between the 14th and 16th of July, experienced a subscription of 38.25 times on the last day. Being a company that has yet to turn a profit, receiving such a positive response was extremely unexpected.
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Zomato has developed considerably in recent years, with 30 million orders in 2018 and 400 million orders by 2020. Along with the increase in orders, there was a considerable increase in average cart size, income, delivery partners, number of partner restaurants, and so on.
Despite the pandemic, Zomato’s revenue in 2019 was close to ₹1400 crores, which climbed to ₹2700 crores in 2020. This demonstrates the significance of a food delivery app and a shift in consumer dining habits. Let us talk more about the success of this food delivery app with Zomato share market price.
Before discussing the Zomato IPO, let me tell you what exactly is an IPO. The process of converting a privately owned firm into a public corporation is known as the Initial Public Offering (IPO). This procedure also provides clever investors with the potential to make a substantial return on their money.
An IPO is often started to infuse fresh equity money into the business, to allow simple trading of current assets, raise funds for the future, or monetize existing stakeholders’ interests.
Recently, the shares of Zomato in the market have had a fantastic start on the bourses after the share offering was moved forward from July 27 to today. The shares of this food delivery app opened at ₹116, representing a 53% premium over the issued price of ₹76.
At 10:05 am, Zomato shares were up at a day high of ₹134.70, up 77.63% on the BSE, and ₹135.60, up 77.57% on the NSE. The IPO of this food delivery app is the second largest after the Coal India share sale in October 2010.
It is also the first Indian mega-company to go public, opening the door of opportunities for other top digital firms to follow suit, including Flipkart, Paytm and Ola.
Zomato, the most famous food delivery app today, was founded in 2008. It was backed by China’s Ant Group, which is one of the country’s most renowned companies today, with a global presence in 24 countries.
The investment community reacted positively to Zomato’s ₹9,375-crore deal. The Zomato IPO was subscribed to 38.25 times, with the part allocated for qualified institutional buyers (QIB) being subscribed to 51.79 times, non-institutional shareholders being subscribed to 32.96 times, and retail investors being subscribed to 7.45 times.
The initial market of food delivery startups and restaurant aggregators offered ₹9,000 crores fresh issue and a ₹375 crore offer for sale by the promoter, Info Edge India. Before the Zomato IPO, the anchor book had also received a positive reaction. Zomato received ₹4,196.51 crores in funding from 186 anchor investors, including American Funds, New World Fund Inc, BlackRock Global and Tiger Global Investments Fund.
Source: Prime Insights
Meanwhile, in a letter to shareholders before the offering, Deepinder Goyal referred to the listing as “a fresh day zero” for the food delivery app. “Today is a significant day for us. A new Day Zero has arrived. But we wouldn’t be here without the amazing efforts of India’s whole internet ecosystem,” Mr Goyal said in the letter titled “Letter from Deepi.”
“I have faith in India and where our nation will be in the future. India is a difficult market in which to operate, but if you are built to thrive in India, you are already extraordinary”, Deepinder also said.
In July 2010, Bikhchandani emailed Goyal, offering to invest in FoodieBay, and the two struck a deal within 72 hours. Bikhchandani’s bet was correct eleven years later.
The value of Info Edge’s investment has increased more than 1,000 times. “Here is the ultimate proof why India should spend more on start-ups and early-stage venture capital funds,” Bikhchandani wrote in a tweet.
“All credit should be given to the Zomato team. Our talent is just finding excellent teams and pouring money into them. Money is a type of commodity. “Entrepreneurship is uncommon,” he added.
Zomato share market price began at ₹116 and soared 66% on its first day on the market on Friday, making its creator, Deepinder Goyal, a billionaire. It is currently one of India’s top 50 most valuable publicly listed companies, surpassing Tata Motors, Mahindra & Mahindra and Coal India Ltd.
Zomato, the food delivery app that had a spectacular stock market debut on Friday, saw its shares rise for the second day on Monday. Zomato shares were trading 2.5% higher on the Bombay Stock Exchange (BSE) at ₹129 per share, according to Livemint.
Zomato has said that the net proceeds of the new issuance would be used to support inorganic and organic growth attempts, as well as general company purposes. The home-grown meal delivery network, which debuted in 2008, now operates in about 525 locations throughout India and has collaborated with nearly 390,000 eateries.
The firm, which has yet to achieve profitability, reported a combined loss of ₹816 crores in FY21, compared to a loss of ₹2,385 crores the previous year.
Nobody knows for certain how the profits will turn out. For the time being, the IPO has been oversubscribed, even though a share was trading in a price range of ₹72 to ₹76. The objective of generating ₹9375 crores was readily met.
If you want your food delivery business to grow the way Zomato did, you must get a food delivery app like Zomato developed. To stand out in the marketplace, your digital presence must be strong and we can help you with that. Contact us for more details.
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