Zomato IPO: Shares trade at a 26% premium in grey market ahead of the issue


Food delivery giant Zomato witnessed strong demand from the grey market investors as shares were available at a premium of 26 percent in the grey market ahead of the opening of its initial public offering (IPO).

Its Rs 9,375-crore initial public offering, the largest in last sixteen months since SBI Card IPO, will open for subscription on July 14. The offer will close on July 16.

The offer comprises a fresh issue of Rs 9,000 crore and an offer for sale of Rs 375 crore by Info Edge, a pure play internet company. Info Edge is the largest shareholder in Zomato with 18.68 percent stake.

The price band for IPO has been fixed at Rs 72-76 per share.

Zomato shares traded at a premium of Rs 16-20, i.e. a 21-26 percent over upper end of the IPO price band of Rs 76, the data available on the IPO Watch and IPO Central showed. The traded price comes to Rs 92-96 per share in the grey market.

The grey market is an unofficial platform for trading in shares, wherein the trading starts immediately after the announcement of price band till the listing of shares on the bourses.

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This will be 27th IPO in the current year. The recent ones being GR Infraprojects and Clean Science & Technology.

Zomato offer includes a reservation of up to 65 lakh equity shares for employees.

The company through its technology platform connects customers, restaurant partners and delivery partners, serving their multiple needs. Customers use company’s platform to search and discover restaurants, read and write customer generated reviews and view and upload photos, order food delivery, book a table and make payments while dining-out at restaurants.

It was present in 525 cities in India, with 3,89,932 active restaurant listings in the year ended March 2021.

The food delivery company posted a consolidated loss of Rs 816.43 crore in the financial year ended March 2021 against loss of Rs 2,385.6 crore in the previous year. Revenue from operations during the same period fell to Rs 1,993.78 crore, from Rs 2,604.73 crore as there was a impact of Covid-19 on operations of the company.

Also read –┬áZomato IPO expected to do well given the investor interest, but doesn’t seem like a multibagger story: Naveen Chandramohan of ITUS

Equity shares are proposed to be listed on the BSE and NSE. Kotak Mahindra Capital Company, Morgan Stanley India Company and Credit Suisse Securities (India) are the global co-ordinators and the book running lead managers to the issue. BofA Securities India, and Citigroup Global Markets India are the book running lead managers to the offer.