Zomato’s IPO Invokes Potent Oversubscription
Unicorn food delivery platform, Zomato, elicited a powerful response through its flamboyant issuance of its initial public offering (IPO) between July 14th and July 16th. The profound reaction to the IPO from the investors enabled the unicorn to receive an oversubscription rate (when the demand for a new distribution of securities/shares transcends the number of securities issued by the company) of an excess of 38 times, therefore prompting a demand of shares possessing a remarkable valuation of Rs. 2.13 Lakh Crore ($28.5 billion), with the initial issue being valued at Rs. 9,375 Crore ($1.25 billion).
The company propounded shares at Rs. 72-76 (~$1) apiece, with multiples of 195 determining the lot sizes. Zomato voluntarily opted to prioritise the Indian market, despite possessing presence in 23 other nations. In the financial year 2020-21, the corporation reported a revenue amount of an excess of Rs. 2,100 Crore ($280 million) in comparison to a net loss of Rs. 815 Crore ($109 million).
The overwhelming response occurred as a result of the potential for growth. Food services (food not produced by individuals at home) possess a market share in the food industry of solely 8-9% in the country, which possesses the ability to enlarge manifold in forthcoming years. Despite the excessively beneficial reaction to the IPO, scepticism also proliferated concerning Zomato’s considerable overvaluation and detrimental losses which could impede future growth.
PayTM Seeking to Establish a New Indian Stock Market Record
Further intensifying an already heavily-dynamised week for IPOs, One97 Communications, the parent company of one of India’s most prospective and pervasive digital payment platforms, PayTM, on Friday, filed an extremely zealous IPO which will seek to claim the title of the most colossal public issuing in Indian stock market history, scheduled to generate Rs. 16,600 Crore (over $2.2 billion). Based on the company’s draft red-herring prospectus, the IPO’s designated amount will be bifurcated equally into two allocations comprising a Rs. 8,300 Crore ($1.1 billion) fresh issue, followed by a secondary issue, or offer on sale, of the same amount.
One97 Communications possessed the position of the largest startup in India in April 2021, with a valuation exceeding Rs. 1.1 Lakh Crore ($16 Billion) (according to Statista), and according to Economic Times the digital payments company is targeting a valuation of over $24 billion, post the IPO. The public issuance is scheduled to transpire during the Diwali period, and aspires to achieve the position of the largest IPO in Indian stock market history, exceeding the previously established record of Coal India’s Rs. 15,475 Crore ($2.07 Billion).
Indian Forex Reserves Touch Record High
According to official figures published by the Reserve Bank of India, the nation’s foreign exchange reserves obtained a record apogee of $611.85 billion following a robust increase by $1.88 billion, in the week concluded July 9th. This record-setting growth proceeds as a new period of enlarging forex reserves in the country over the prior two weeks, with the two weeks ended July 2nd having recorded a cumulative $6.079 billion growth.
Written By: Ronojoy Borpujari