Zomato - a year since the glorious IPO!

3 Aug 2022 , 12:18 PM

On July 14, 2021, restaurant aggregator and food delivery company Zomato opened its Initial public offering (IPO). The price range of the IPO was between Rs 72-76 per share, with a face value of Rs 1 per share. The much-anticipated IPO from the Indian startup closed on July 16 with a 35 times oversubscription.

The stock opened at Rs 116 on the National Stock Exchange (NSE) on July 23, 2021, a 52.63 % valuation premium to its issue pricce of Rs76. On the BSE, the stock closed at Rs 125.85, up 65.59 percent from the issue price, while on the NSE, the stock closed at Rs 125.30, up 64.87 percent from the issue price of Rs 76, at the end of first day of its trading. Additionally, on the BSE on November 16, 2021, Zomato’s share price reached a record level of Rs 169.10 per share. Having followed that, the stock price dropped gradually, eventually closing at Rs 137.45 per share towards the end of 2021.

From there, the shares fell even farther, reaching an all-time low price of Rs 50.35 on May 11 this year. Zomato’s share price performance has lagged behind that of the S&P BSE Sensex, S&P BSE 500, and S&P BSE IPO indexes. Foreign portfolio investors (FPIs) represent the largest proportion of institutional holdings in Zomato. Their stake rose from 7.69 percent at the time of the IPO to 10.17 percent in quarter ended March 2022.

The decline in Zomato stock can be attributed to two factors: first, the expiration of the lock-in period for pre-IPO investors, and second, the rationalization of valuations of new-generation tech businesses globally. A third very important factor that caused the decline in the stock price of Zomata was the decision to acquire Blinkit.