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Zomato IPO Grey Market Premium Improves; Signals Strong Listing Gains. Allotment, Key Points

·3-min read

Zomato, the most popular food delivery platform in India is expected is likely to be listed next week on July 27 on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The much-awaited Zomato initial public offer (IPO) received a strong demand from investors when it had opened for subscription last week. A whopping Rs 2.13 lakh crore worth of bids put up for the India’s first unicorn startup IPO. Zomato IPO share allotment is expected to be finalised on July 22, according to brokerages. Once the allocation is final, the ineligible customers will get the refund in their bank accounts by July 23.

Zomato IPO opened for subscription July 14-16 with a price range of Rs 72-76. The issue comprised an offer for sale (OFS) of ₹375 crore by the company’s early investor Info Edge and a fresh issue worth ₹9,000 crore. Zomato IPO saw an over oversubscription of 38.25 times during the three-day period. The quota reserved for qualified institutional buyers was subscribed 51.79 times. The portion set aside for non-institutional investors was booked 32.96 times. The retail quota was booked subscribed 7.87 times.

The popular food delivery platform eyes a market capitalisation of about Rs 64,500 crore at the issue prize. It will be will be higher than the combined market value of India’s half a dozen listed quick-service restaurant chains.

The grey market premium of Zomato has been doubled to the range of ₹16-18 on July 20, over issue of of Rs 72-76. The shares were trading at around Rs 91-95 apiece, signalling a premium of over 20 per cent over the IPO price, according to reports. They were bidding at Rs 10 in the unofficial market ahead of the issue on July 14. This improvement indicates a strong buying interest in the primary market, the analysts believe.

Zomato has raised ₹4,196 crore from the prominent institutional investors ahead of the IPO launch. The anchor investors booked 552.17 million equity shares at a price of ₹76 per share. BlackRock, Government of Singapore, Goldman Sachs, Abu Dhabi Investment Authority are some of the investors that participated in the anchor book.

“The Zomato IPO received great response from investors and was subscribed 38 times. While the retail portion was subscribed 7.5 times the QIB and NII portion was subscribed by 51.8 times and 33 times respectively as investors queued in for a slice of the food delivery business in India. Zomato is one of the two leading players in India and the first of the new age unicorns to list on the exchanges. Given strong investor demand for the IPO we expect a good listing for the company. While we expect decent listing gains in the Zomato IPO we also remain positive on the long term growth prospects of the company Given strong delivery network, high barriers to entry, expected turnaround and significant growth opportunities in tier-II and tier-III cities and had given a SUBSCRIBE rating to the IPO,” said Jyoti Roy DVP-Equity Strategist, Angel Broking Ltd.

The grey market is an unofficial platform where the trading in IPO shares starts once the price band gets announced and continues till the listing of shares on the bourses. It must be noted that the grey market premium for an IPO does not possess any statistical background. It often denotes the investors’ sentiment ahead of the listing day.

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