Zomato's much awaited debut left investors richer by over 50% today compared to the issue price. The bumper opening for Zomato share came days after the grey market premium (GMP) had been hovering near 20% percent mark to the IPO price.
However, a huge demand for shares during and after the IPO pushed the GMP to nearly 50% above the issue price of Rs 76.
The stock made its debut on NSE today, 52.63% above the IPO issue price at Rs 116. Shares in the IPO were offered in a price band of Rs 72-76. The firm has raised Rs 9,375 crore from the IPO. The issue was open from July 14 to July 16.
On last day, the initial public offer (IPO) was subscribed 38.25 times.
The issue received bids for 2,751.25 equity shares against IPO size of 71.92 crore equity shares on offer.
Considering the huge subscription, all applicants were not successful in bagging shares of the food delivery firm. After listing on bourses, the stock hit upper circuit of 20% compared to the issue price, signaling huge demand on BSE and NSE. However, analysts have mixed take on the shares of Zomato post listing. Here's what they said.
Pavitraa Shetty, Co-founder & Trainer, Tips2Trades said, "Even though a bumper listing for Zomato was expected, the current valuations seem to be extremely overstretched. This would be marked as a great day for the food tech sector but the real test for Zomato would begin now.
How quickly Zomato can start its journey to becoming a profitable company, and gain further market share will truly determine its future. Allotted investors are advised to book partial profits and wait for a strong dip below Rs 100 to start accumulating again."
Jyoti Roy, DVP- Equity Strategist, Angel Broking said, "We had given a subscribe rating to the IPO. Given strong delivery network, high barriers to entry, expected turnaround and significant growth opportunities in tier-II and tier-III cities, we continue to remain positive on the stock from a long term perspective. Post the stellar listing, we recommend that short-term investors that were looking for listing gains can exit the stock while long-term investors can book partial profits."
"Zomato had a super listing on the bourses. Given the low penetration, two large players in the market, falling advertising costs and company’s focus on the domestic market, growth as well profitability after initial cash burn will improve going ahead," said Vikas Jain, Senior Research Analyst at Reliance Securities.
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