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Zomato’s IPO to open today, things to remember before investing

Food delivery app and Indian restaurant aggregator Zomato is bringing in Initial Public Offerings (IPO) today. The IPO is Rs.9,375 crores. Out of this, there are fresh shares worth Rs 9,000 crore and offers for sale (OFS) of Info Age (India) worth Rs 375 crore.

The IPO, which began today, will close on July 16 and the company has fixed the price band of one share at Rs 72-76.

What is IPO?

When a company releases its stock to the public for the first time, it is called IPO. Limited companies bring IPO to be listed in the stock market.

In IPO, the company gives its shares to the people and raises funds in return.

Along with getting funds, it also enhances the reputation of the company. Also, the company can pay through shares when making a deal in the future.

Why Zomato’s IPO?

Zomato is the first food aggregator startup to bring IPO. This is the biggest IPO of the year. In March last year, the SBI Cards and Payment Service had received an IPO of Rs 10,341 crore. Zomato has been bringing the biggest IPO since then.

It will also overtake the Indian Railway Finance Corporation (IRFC) which came out in January this year. After completion of IPO, the valuation of Zomato will be Rs.64,365 crore.

Many big names showed interest before IPO

Looking at the stock exchange data, the company has raised a fund of Rs 4,196 crore in the open anchor position on July 13 before the beginning of the IPO. 186 anchor investors have taken 55.2 crore equity shares at the rate of Rs 76.

Zomato’s anchor investors include big names like Tiger Global, Blackrock, JP Morgan, Morgan Stanley, Singapore Government, and Franklin Templeton.

Where will the fund be used?

Zomato had raised Rs 1,800 crore from Tiger Global, Kora, and other investors in February this year. The valuation of the company had then reached around Rs 40,000 crore.

Zomato has said that the money he received from IPO will be used for general needs and development. The company will use Rs 6,750 crore for organic and organic growth.

Doubts about long-term profits

According to media reports, experts expect gains at the beginning of the IPO, but there are doubts about long-term profits due to Zomato’s non-profit-making in recent times and the entry of giant e-commerce giant Amazon into the market.

For the last three years, Zomato has incurred a continuous loss of Rs.2,304 crore, Rs.816 crore, and Rs.577 crores. Zomato operates in 525 cities in the country.

Disclaimer: This article was published on 14th July 2021 

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