Zomato share price continued to extend gains on the second day on Monday after India's first unicorn to go public made a strong debut on the stock exchanges on Friday. Shares of Zomato surged as much as 13% on the BSE, hitting an intra-day high of 143 per share in Monday's deals. The company backed by Jack Ma’s Ant Group has already mobilised Rs 4,196.51 crore from 186 anchor investors a day before IPO. And, was oversubscribed by over 38 times, mostly by the QIBs. At around 13:50 pm, the stock was trading 4.3 per cent higher to Rs 131.25 per share, which is near to 52-week high level, as compared to flat but positive S&P BSE Sensex. Zomato is one of the first Indian unicorn startups to launch an IPO. It is also the first among Indian online food aggregators. The IPO comprises a fresh issue of equity shares worth Rs 9,000 crore and an offer-for-sale (OFS) worth Rs 375 crore by existing and early investor Info Edge (India). The company regained its market capitalisation of over Rs 1 lakh crore, which was touched on Friday during listing gains. The counter opened today with a sharp upside spike, however, immediately fell to day’s low level at Rs 125.5 per share which is a Friday’s close.
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Jyoti Roy of Angel Broking said that the stock has continued to move up despite expensive valuations given strong investor demand which will continue to drive the stock prices for some more time. ''While valuations may seem expensive at current levels we remain positive on the long-term growth prospects of the company given the strong delivery network, high barriers to entry, expected turnaround, and significant growth opportunities in tier-II and tier-III cities,'' he said.
''We would recommend investors hold the stock at current levels. While the Q1FY22 results would have been impacted by the second Covid wave we believe that management commentary around future growth prospects post the second Covid wave will be one of the key drivers for further rerating,'' Roy added.The stock jump on debut turned Zomato's founder and Chief Executive Officer (CEO) Deepinder Goyal into a poster boy for India’s fledgling startup scene, pushing his fortune close to the $1 billion mark. Goyal is worth $650 million based on his current 4.7% stake in Zomato, according to the Bloomberg Billionaires Index.
Zomato has said it will utilise the net proceeds from the fresh issue for funding organic and inorganic growth initiatives and general corporate purposes. The home-grown food delivery platform, launched in 2008, operates in about 525 cities in India and has partnered with close to 390,000 restaurants. The company, which is yet to turn profitable, posted a consolidated loss of 816 crore in FY21 as compared to loss of 2,385 crore in the previous year.