Ant-backed Zomato soars to US$12 billion valuation on its debut in the Indian market Reuters

Authors: Anuron Kumar Mitra and Chandini Monnappa

Bangalore (Reuters)-The share price of food delivery company Zomato Ltd nearly doubled in Friday’s IPO, marking the first time an Indian startup company valued at more than $1 billion went public on the stock market.

The debut four days ahead of schedule reflects investor interest in internet-based consumer startups that are expected to thrive during the COVID-19 pandemic and coincide with the Indian stock market approaching historical highs.

The stock price surged 82.8% after opening at 116 rupees in pre-opening trading, which represents a 52.6% premium to the initial public offering (IPO) price of 76 rupees, and the company is valued at approximately US$12 billion.

With the support of the Chinese Ant Group, Zomato’s 93.75 billion rupees IPO is the first start-up in the Indian food delivery market, and the research company RedSeer estimates that the market is worth US$4.2 billion.

This local food aggregator was launched in 2008, has operations in approximately 525 cities in India, and cooperates with nearly 390,000 restaurants.

It provides door-to-door food delivery services, allows customers to book tables and organize restaurant reviews, making it a competitor to the food delivery services of Swiggy and Amazon (NASDAQ:) backed by SoftBank.

The company’s offering last week attracted $46.3 billion worth of bids, oversubscribed by more than 38 times, and large institutional investors also placed big bets.

“Growth is the key here. Zomato may not be profitable, but it is growing exponentially and can enviably maintain this momentum,” said Dennis Hewson, a financial analyst at British investment platform AJ Bell.

Zomato’s loss for the year ended March 31 narrowed to 8.13 billion rupees, while operating income fell slightly to 19.94 billion rupees year-on-year.

(1 USD = 74.5250 Indian rupees)