Zomato IPO : To Invest or Not

Food delivery giant raises Rs 4,196.51 crore from anchor investors ahead of public issue

Marquee investors who participated in the anchor book are New World Fund Inc, American Funds, Tiger Global Investments Fund, BlackRock Global, Lansforsakringar Asienfond, Tokio Marine Life Insurance, Fidelity Funds, JPMorgan, Master Trust Bank of Japan, Morgan Stanley Investment Fund, T Rowe Price and Canada Pension Plan Investment Board.

Among other global investors included Government of Singapore, Monetary Authority of Singapore, WF Asian Smaller Companies Fund, Carmignac Portfolio, Steadview Capital Mauritius, Wellington Trust Company, Nomura, Aberdeen Global India Equity, Goldman Sachs, Schroder International, TKP Investments, Abu Dhabi Investment Authority, HSBC Global, UBS, Societe Generale, and Invesco Emerging Markets Class.

Among domestic investors, SBI Mutual Fund, Axis Mutual Fund, Aditya Birla Sun Life Insurance, Kotak MF, Nippon Life, UTI MF, Motilal Oswal MF, HDFC Trustee, Franklin India, HDFC MF, ICICI Prudential, IIFL MF, IDFC MF, Sundaram MF, Tata MF, Edelweiss Trusteeship, HDFC Life Insurance, and Max Life Insurance also invested in the food delivery company through anchor book.

Verdict

We feel that since it is a much hyped IPO, it is better to avoid as its valuation is very much on higher side and one can buy it post listing in some day market crash. At 21 P/E for a loss making company, the valuation is on much higher side. In 2007 Reliancepower was also a overhyped IPO and investors lost lot of money in that IPO. It will be better that one wait for a quarter of the operations of the company and then invest in this stock. 

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