Shares of food delivery firm Zomato Ltd nearly doubled on Friday in a stellar first listing of a local unicorn in India, setting the pace for a slew of such debuts by internet-based startups that are thriving during the COVID-19 pandemic.
Berkshire Hathaway Inc-backed Paytm, hospitality company Oyo Hotels and ride-hailing firm Ola, both backed by SoftBank, are among the Indian startups set to enter markets, riding on support from foreign funds and local investors.
Shares of Zomato soared 82.8% after opening at 116 rupees in pre-open trade, a 53% premium to the offer price of 76 rupees for the 93.75 billion rupees IPO, valuing the company at about $12 billion.
China's Ant Group holds a 16.53% stake in Zomato, while its top shareholder is online technology company Info Edge (India), which holds a 18.55% stake.
"Today is a big day for us...we couldn't have gotten here without the incredible efforts of India's entire internet ecosystem," Zomato's founder and Chief Executive Deepinder Goyal said in a blog post.
Goyal, 38, an alumnus of the Indian Institute of Technology in Delhi, launched Zomato in 2008 with fellow graduate Pankaj Chaddah. As of March 31, it operated in about 525 cities in India and has partnered with close to 390,000 restaurants.
It is the first startup to go public in India's food delivery market, which research firm RedSeer estimated is worth $4.2 billion. It offers home delivery of food, allows customers to book tables for dining-in and collates restaurant reviews, making it a competitor to SoftBank-backed Swiggy and Amazon.com's food delivery service.
The company's offering last week drew bids worth $46.3 billion, making it more than 38 times oversubscribed, with big institutional investors placing major bets.
"Growth is key here. Zomato might not be profitable but it is growing exponentially and is enviably positioned to keep that momentum," said Danni Hewson, a financial analyst with AJ Bell, an investment platform in England.
Zomato's loss for the year ended March 31 narrowed to 8.13 billion rupees, while revenue from operations fell slightly year-on-year to 19.94 billion rupees.
"We are...not going to alter our course for short term profits at the cost of long term success of the company," Goyal said. ($1 = 74.5250 Indian rupees)