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Indian Startup Zomato's Stellar Stock Market Debut Sets Up Stage For Other Indian Tech Listings

Indian Startup Zomato's Stellar Stock Market Debut Sets Up Stage For Other Indian Tech Listings
There was a massive 65.8 per cent surge in the stocks of the Indian food delivery firm Zomato Ltd in its stock market debut on Friday which set the value of the company at 988.49 billion rupees ($13.28 billion) while also and setting up the stage for other domestic Indian startups to plan their own listings.
Zomato, about 13 years old, is amongst the first generation of big home grown startups in the country that successfully went public on Indian bourses.
"Zomato is definitely a big event for the startup community, and for the other technology companies that are waiting to come to the capital market," said Siddhartha Khemka, head of retail research, broking & distribution at Motilal Oswal Financial Services.
Other Indian startups set to enter the public markets include Paytm, which is backed by Berkshire Hathaway Inc, the hospitality company Oyo Hotels and ride hailing company Ola, both of which have SoftBank as their investors.
Zomato is mainly a food delivery app, just like the United States based DoorDash Inc, and currently has partnerships with more than,000 restaurants and cafes in 525 cities in India. the app can also be used by customers to book tables for dining-in, writing food reviews and uploading photos.
Zomato's opening price of 116 rupees, a 53% premium to the offer price of 76 rupees, was the second best performer among Indian listings of at least $500 million, after Power Grid Corp, which gained 73% at open on its first trading day in 2007.
The Gurugram based Zomato is yet to make a profit – just like most other startups. The company has said that the money raised from the listing will be used by the company to enhance its delivery infrastructure and acquire more users. The major competitors of the company in the Indian market are the SoftBank-backed Swiggy and the food delivery service of
The "tremendous response to our IPO gives us the confidence that the world is full of investors who appreciate the magnitude of investments we are making, and take a long term view of our business," said Zomato founder, 38, Deepinder Goyal, an engineer from the esteemed Indian Institute of Technology in Delhi.
Goyal’s sentiment was echoed by analysts and hailed the company’s successful initial public offering as proof of the changing appetite of investors and their ability to take risks on a startup that is yet to make profits.
"The market is showing some maturity by trying to understand and value such companies which are non-traditional, both in terms of the business that they do and in terms of the financials they offer," Motilal Oswal's Khemka said.
16.53 per cent stake in Zomato is held by China's Ant Group while the top shareholder of the company is online technology company Info Edge (India) which has 18.55 per cent of its stocks.
"Zomato doesn't come with the baggage that dragged at the UK firm's debut," said Danni Hewson, a financial analyst with British investment platform AJ Bell. "Growth is key here. Zomato might not be profitable but it is growing exponentially and is enviably positioned to keep that momentum."

Christopher J. Mitchell

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