Zomato Listing Tomorrow: Grey Market Premium Jumps Nearly 30%. What to Expect

Zomato shares is expected to hit the market on Friday. Investors are eagerly waiting for India’s first unicorn startup to get listed on the bourses on July 23. The market analysts suggest a strong listing on the back of significant rise in Zomato’s grey market premium and positive sentiment. “Zomato to start the day with 20-25 percent and 25-28 percent premium respectively on Friday,” said Astha Jain, Senior Research Analyst at Hem Securities. The share allotment status of Zomato initial public offering (IPO) was finalised on Thursday.

The much-awaited Zomato IPO received a stellar response from investors. The Rs 9,375-crore issue was was subscribed 40.38 times, the third highest in the Indian capital market. Despite the high price, the issue received a strong response from the investors. The portion reserved for qualified institutional buyers (QIB) was subscribed 54.71 times while the non-institutional investors attracted 34.80 times subscription. The retail investors booked the issue 7.87 times. Zomato raised ₹4,196 crore from 186 anchor investors ahead of the IPO by allocating 552.2 million shares at Rs 76 apiece.

The food-delivery startup fixed the the IPO price at the upper end of the price range of ₹ 72-76. Amid the buzz of early listing, the grey market premium on the unlisted share edged higher today. The grey market premium of Zomato share was doubled to the range of Rs 20-22 on July 22, comapared to Rs 10 a week earlier. The shares were trading at around Rs 96-98 apiece, signalling a premium of nearly 29 per cent over the IPO price, according to reports.This improvement indicates a strong buying interest in the primary market, the analysts mentioned.

“As per the financials of the company, Zomato IPO listing gain can be expected around 25 per cent or roughly near ₹15 per Zomato shares on the listing date of the public issue,” said Ashok Holani, Director at Holani Consultants Private Limited.  The analysts predict at least 15 per cent premium on the listing day.

 “Zomato’s listing on Indian exchanges is a watershed moment for Indian capital markets and investors who can now own a large and scalable new age tech companies. It not only sets the ball rolling for Zomato but also for similar new age tech companies as India is now considered to be an emerging hub for startups and unicorns, of which many are lined up for IPO,” said Hemang Kapasi, head of equities, Sanctum Wealth Management.

“Zomato primarily caters in the Indian online food delivery market which is expected to grow to at CAGR of 20% over the next 5 years to touch $11.1bn. Zomato is well positioned to take advantage of India’s food delivery market led by first mover advantage given the lower penetration seen compared to other countries like China and US. The opportunity is immense, but once the euphoria on the listing gets settled, investors need to look more constructively on the longer term improvement in various metrics, further disruption (if any) and consistency on delivery on the premise on which the IPO is coming. Zomato can expect listing gains by 20 -25% as indicated in grey market” he futher mentioned.