Zomato's shares soar; m-cap crosses 1 lakh crore-mark

Recently, food delivery app Zomato shares nearly doubled its value in debut trading in the first stock market listing of an Indian startup has been valued at over $1 billion. The stellar debut, which was advanced by four days, was shown on investor’s interest in internet-based consumer startups that are expected to thrive during the COVID-19 pandemic and comes at a time when India's stock market is near all-time highs.

Shares rising 82.8 percent after opening at 116 rupees in pre-open trade, which was a 52.6 percent premium to the initial public offering (IPO) price of 76, valuing the firm at about $12 billion. The 93.75 billion rupees IPO of Zomato, supported by China's Ant Group, is the first for a startup in India's food delivery market, which research firm RedSeer approximated its worth $4.2 billion.

The home-grown food aggregator, launched in 2008, runs in about 525 cities in India and has partnered with close to 390,000 restaurants. It provides home delivery of food, allows customers to book tables for dining-in, and collates restaurant reviews, making it a competitor to SoftBank-backed Swiggy and Amazon.com's food delivery service.

The company's offering last week drew bids worth $46.3 billion as it was more than 38 times oversubscribed, with big institutional investors also placing major bets.

Danni Hewson, a financial analyst with AJ Bell, an investment platform in England says, "Growth is key here. Zomato might not be profitable but it is growing exponentially and is enviably positioned to keep that momentum,"

Zomato's loss for the year ended March 31 drpooed to 8.13 billion rupees, while revenue from operations fell slightly year-on-year to 19.94 billion rupees.