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Zomato's stellar stock market debut shows investors willing to bet on New Age firms; analysts weigh in

03:08 PM Jul 23, 2021 | FPJ Web Desk

Food delivery platform Zomato's market capitalisation is around Rs 1 lakh crore, after its stellar debut on the stock exchanges on July 23. Currently, it is at Rs 96,103.45 crore.

The IPO has elicited mixed views from analysts, some who look at Zomato attracting subscription to investors willing to bet on New Age technology companies while others feel the gains may not sustain in the long-term.

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Investors willing to bet on New Age tech firms

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The stellar debut of Zomato’s on the domestic bourse after attracting robust subscription is a testimony to the fact that investors are willing to bet big on new-age technology companies which have the characteristics of a disruptive business model. It is also a tribute to Indian entrepreneurship. With growing internet penetration and the number of smartphone user base increasing month after month, the entire private digital ecosystem will enable wealth creation and further deepen our capital market in the coming years, said S Ramesh, MD & CEO, Kotak Mahindra Capital Company.

Subramanya SV, CEO & Co-Founder, Fisdom said, "Zomato going public and the stellar listing is a landmark event for the Indian startups and capital markets. It will be the beginning for a new era where the capital markets will welcome New Age, innovative companies to raise capital and share wealth. This will also serve as an inspiration for many other companies to list in India than going abroad. There will be many more IPOs in the next few months/ years from home grown consumer internet and technology companies. I believe there is sufficient investor appetite for all of these IPOs.”

Siddhi Acharya, Research Analyst at Choice Broking said, "Zomato listed at a considerable premium which was above the grey market expectation of 15-20% listing gains. We attribute this primarily to a high level of interest from the institutional buyers, leading to a lower float available for traders. We are positive on the long term prospects of the company.

Short-term listing gain

"In our view, Zomato IPO is richly valued, which may not sustain in the long run. Retail Investors may apply for this IPO for short-term listing gain. However, these gains may not sustain themselves in the long run," said Amit Jain, Chief Strategist of Ashika Group, and Co-founder of Ashika Wealth Advisory.

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