‘Subscribe For Listing Gains’, Analysts To Investors: Zomato IPO
- BySheetal Sidhu | July 14, 2021
Zomato IPO (initial public offering) the first foodtech startup listing in India is palpable as the food services platform’s IPO opens for subscription on Wednesday. Zomato raised Rs 4196.5 cr, of its total issue size, from 186 anchor investors, including marquee names like Tiger Global and New World Fund. The strong response highlights the excitement for the first foodtech startup listing that will allow investors to play the India digital opportunity.The company’s anchor book saw a strong response from global and domestic institutional investors, with the foodtech unicorn raising Rs 4196.5 crore, or about 45 percent of its total issue size, from 186 anchor investors, including marquee global names like Tiger Global, New World Fund, and Fidelity and domestic mutual funds like HDFC, SBI, and Axis.
Zomato said it finalised the allocation of 552.2 million shares to anchor investors at Rs 76 per share, the upper end of its Rs 72-76 IPO price band. The allotment of shares to anchor investors, which is done a day before the IPO, serves as an indication of the quality of and level of demand for the issue. Indeed, while noting the general enthusiasm around the Zomato IPO, analysts at at least six brokerages, including Angel Broking and ICICI Direct Research, recommended investors ‘subscribe’ or ‘subscribe for listing gains’ to Zomato’s Rs 9,375 crore IPO, which opens for subscription on Wednesday, July 12 and closes on Friday, July 14.
“We are long-term constructive on the fortunes of Zomato. The industry structure is likely to remain a duopoly of Zomato and Swiggy with limited disruptions from the likes of Amazon and direct ordering companies like DotPe and Thrive. Coupled with the moats of network effects, branding, last-mile delivery, customer user behaviour (convenience and addiction) and wide geographical reach, we believe the duopoly is likely to dominate in the visible future,” write analysts at Ventura.
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