Can I buy shares in Zomato?

Sixed group of millennial aged friends discuss investing

Indian food delivery company Zomato has kicked off its hotly awaited IPO. It is the first of a slew of Indian tech unicorn startups expected to go public this year. In this article, we’ll take a closer look at Zomato, how the IPO is going so far and whether you can buy the company’s shares.


What is Zomato?

Founded in 2008, Zomato is a market leader in India’s booming app-based food delivery space.

It offers a digital platform that connects customers, restaurants, and food deliverers. Customers can use the platform to search for restaurants, order food, read and write restaurant reviews, book tables, and make payments while dining out.

The company also runs another service called Hyperpure that provides kitchen products and ingredients to restaurant partners.

Zomato operates in 525 Indian cities, with close to 390,000 active restaurant listings. More than 32 million Indians visit the platform every year. The company also has a presence in 23 countries outside India.

In early 2020, Zomato acquired UberEat’s India business, which officially gave the American ride-sharing firm a 9.9% stake in Zomato. China’s Ant Group is also a shareholder in the company.

Zomato IPO: what do we know about it?

Zomato kicked off its IPO on 14 July.

The three-day offering, with shares priced between 72 and 76 rupees per share, is expected to take the company’s valuation to $9 billion (£6.5 billion), according to the BBC.

The company will be listed on India’s two biggest stock exchanges, the Bombay Stock Exchange and the National Stock Exchange. Trading on both exchanges is likely to begin on 27 July.

Indian news outlets reported that the IPO had been subscribed 1.05 times over by the end of the first day.

Despite the fact that only 10% of Zomato’s issue was reserved for retail investors, demand from these investors was high. By the end of the first day of the IPO, retail investors had oversubscribed to the portion reserved for them 2.7 times.

Qualified institutional investors had subscribed to 98% of the portion set aside for them, while non-institutional investors and employees had bid 12% and 18% respectively.

Ahead of the IPO, Zomato allotted shares worth $562.3 million (£406.2 million) to about 186 institutional investors, who include global investment funds like Fidelity, Blackrock and JP Morgan.


Can I buy shares in Zomato?

Here in the UK, you will be able to buy shares in Zomato once they are officially listed on the two main Indian exchanges. All you need is a share dealing account that gives you access to these two exchanges.

If you don’t have one, check out our top picks for online share dealing account providers in the UK. 

Should I buy shares in Zomato?

Zomato is currently a loss-making business. In the financial year ending March 2021, the company’s revenue was down by 23.4% from the previous year. However, losses were also down by 66% year on year to $110 million (£79.5 million).

We don’t know when the company might be able to turn a profit. But with a primary base in a country of 1.3 billion that’s rapidly embracing digital technology, there are high expectations of growth for Zomato. The company’s CFO, Akshant Goyal, previously said that Zomato will use part of the cash from the IPO to fund “organic and inorganic growth initiatives”.

As you make your decision, just keep in mind that all investing is inherently risky. There is no guarantee of profitability and you could get back less than you put in. Before you invest, do your homework and also consider how the investment fits into your overall investment strategy.

The post Can I buy shares in Zomato? appeared first on The Motley Fool UK.

“This Stock Could Be Like Buying Amazon in 1997”

I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

More reading

  • 2 penny stocks to buy right now
  • Best stocks to buy now: 2 income shares
  • The Gym Group’s share price is rising. Should I buy the stock now?
  • Why did the Avast share price explode this week?
  • Brits like to save money – but love to spend it more!