The Zomato initial public offering (IPO) was subscribed 5.25 times until 10.45 am on July 16 – the third and last day of bidding.
The offer had received bids for 377.27 crore equity shares against IPO size of 71.92 crore equity shares, the subscription data available on the exchanges showed.
Retail investors were at the forefront as the portion reserved for them had been subscribed 5.18 times, while non-institutional investors had placed bids for 63 percent against their reserved portion.
The portion set aside for employees was subscribed 38 percent and that of qualified institutional buyers was subscribed 7.66 times.
While the excitement among investor community has been thrilling, many experts have said that the valuations of the issue are on the higher side.
Some prominent faces from the market and the business world have even questioned the euphoria.
Also read: Why did some fund managers skip the Zomato IPO?
"The data shows that typically overhyped IPOs don’t do too well in the secondary market and Burger King is a good example. Globally if you look at Grubhub, which is a similar company to Zomato, did not do well at all. If you look at global peers, the stocks in secondary market have not done well for the overhyped startup companies," Shankar Sharma, co-founder, First Global told Moneycontrol when asked why he did not invest in the Zomato IPO.
"The retail frenzy with respect to Zomato IPO is that it has touched people’s lives – so there is familiarity with the name and to that extent people want to participate. How ill that work out will be very interesting question," Sharma said.
"Zomato is a concept stock because it is still a loss making company. Indian market typically is stringent about profitability and India does not have a great history of rewarding companies which make losses," Sharma added.My lazy opinions1.GrubHub has been a dog 2.All startups have a simple model of "disruption ":Sell below cost. That fuels growth. Losses don't matter. BUT in listed, losses do matter. If you cut losses to please mkt, you don't get growth.3.Vaccine bad news for delivery biz pic.twitter.com/7gJHebkvPd
— Shankar Sharma (@1shankarsharma) July 15, 2021
“Didn’t see even one fund manager say good things about Zomato on TV. How did so many people invest in the IPO then? Yeh kaun hai jo bolte kuch hai aur karte …. (Who are these people that say something but do …),” Basant Maheshwari, investor and portfolio manager, questioned in a July 15 tweet.
Portfolio manager Gautam Baid posted Zomato's anchor investor list and said:
This is what is called peak euphoria.
A "dividend yield" mutual fund is investing in the Zomato IPO! pic.twitter.com/Rvu9XgDXIm
— Gautam Baid (@Gautam__Baid) July 14, 2021
Follow LIVE updates of the Zomato IPO here
Nithin Kamath, the Founder and CEO of Zerodha, had tweeted on July 12 that the risk with all high growth B2C tech IPOs coming up “is growth plateauing”.
"Growth is usually a function of agility and product bets. Since these companies take more bets and are more agile and aggressive than traditional businesses, they grow faster," Kamath said.
"The question then [is], will the ability of these companies to be agile (reason for growth) reduce because of all the scrutiny that comes by being publicly listed? US companies have managed this pressure well. But it is a more mature market. Need to see how this plays out in India," Kamath said in a series of tweets.
Kamath suggested that we are in a world where "no valuation seems too high as long as there is growth and a large addressable market". "If you were old school and looked at revenues and profits, you would have missed out on some of the best public (US) and private companies (US and India), in the last decade," he noted.
The other question to which Kamath was for looking answers was: "Will Indian consumers becoming shareholders of the brands they use increase brand loyalty? Will it maybe reduce the cost of acquisition (CAC), one of the biggest expenses for these businesses?"
"I guess we'll see," he added.
"Good one... Zomato IPO is like Virar Local - people inside want to get out, people outside can't wait to get in," investor Chugh tweeted on July 15, citing a WhatsApp forward.
In a Twitter thread, investor Anurag Singh discussed if the Zomato IPO was a golden opportunity for investors. He questioned if it was a multi-year holding story or just a listing pop and how much appreciation can an investor expect. "This time it’s different, or is it?" he asked.