Shares of Indian food delivery start-up surge in debut

Zomato’s grocery delivery partner can be seen on a street in Kolkata, India.

Debarchan Chatterjee | NurPhoto | Getty Images

Indian grocery supplier Zomato shares rose as much as 82% on its market debut on Friday.

The initial public offering price was set at Rs 76 per share and the stock opened 52.63% higher at Rs 116 on the National Stock Exchange of India, which was worth approximately Rs 910 billion ($ 12.2 billion) to the company.

Zomato shares also trade on BSE, India’s other exchange, where they opened at 115 rupees per unit.

As of 5:39 p.m. HK / SIN, Zomato shares were trading over 66% at Rs 126.50, slightly below the previous session high of Rs 138.90.

The company filed for an IPO in April and planned to use the proceeds to fund growth, which may include mergers or acquisitions. Zomato offers 1.23 billion shares and values ​​the IPO at 93.75 billion rupees. This includes the issuance of new shares valued at up to 90 billion rupees and shares valued at up to 3.75 billion rupees sold by existing shareholders.

Reuters reported that Zomato’s initial public offering drew $ 46.3 billion in bids last week and was oversubscribed more than 38 times, with large institutional investors placing big bets.

Zomato, together with rival start-up Swiggy, dominates the US $ 4.2 billion grocery delivery market in India, which is highly competitive but also very fragmented.

In addition to food delivery, users can also use Zomato to book tables and aggregate reviews for restaurants. Tech giant Uber sold its Indian grocery delivery business to Zomato last year in an all-stock deal that gave the US company a stake in the start-up. Other prominent supporters of Zomato include Indian Internet company Info Edge, Alibaba subsidiary Ant Group and Singapore state investor Temasek.

In its prospectus, the Indian tech company said it faces intense competition from chain restaurants that have their own online ordering platforms. Other competitors are cloud kitchens and restaurants that operate their own delivery fleets, as well as offline ordering by phone.

For the year ended March 31, Zomato reported a loss of Rs 8.16 billion – an improvement over the previous year’s loss of Rs 23.86 billion. However, the company’s operating revenue declined 23.46% year over year to Rs.19.94 billion.

Zomato is the first in a line of prominent local startups to go public at a time when Indian markets have shown resilience despite the economic uncertainty caused by the pandemic.

Payment giant Paytm has filed for a $ 2.2 billion initial public offering, while others like e-commerce company Flipkart and ride-hailing startup Ola are considering listing options. A venture investor previously told CNBC that 2021 would “mark the beginning of a new era for the Indian startup ecosystem,” with a number of significant IPOs.

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