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Zomato's IPO: Add to Cart or Wait it Out?

Should you dig into your wallet and invest now when it is low or hold on to see if this is only a listing boom?

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1 min read

Zomato on 14 July made a special delivery of its first initial public offering or IPO and attracted 1.05 times the issue size on the very first day.

You heard that right, a company that began as a restaurant discovery platform before turning into a full-scale food delivery company with presence in over 500 cities, made history by becoming the first Indian 'unicorn' to launch a domestic IPO.

When the issue opened on 14 July morning, retail investors jumped at the 10 percent quota reserved for them and were hungry for more given that there were 2.7 times as many bids as shares available.
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However, keeping the celebration of the IPO aside, brokerages and analysts have cautioned that given the companies sky-high valuation—which is reported to be 25 times the enterprise value—and the fact that the company has been reporting losses for the past three years, the path to profitability for Zomato is not clear.

Given the risks attached, should you dig into your wallet and invest right now when it is low or hold on to see if this is only a listing boom? What do investors have to say?

To answer your questions on Zomato’s IPO, for this episode we spoke to Hemang Jani, Head of Equity Research at Motilal Oswal Financial Services.

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

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