zomato IPO: Zomato grey market premium surges to 20% in signs of investor excitement

New Delhi: Even before Zomato makes an official announcement of its much-awaited initial public offering (IPO), the food aggregator’s stock is seeing a lot of interest in the grey market.

Unlisted shares of the homegrown unicorn are reported to be trading at a price which is Rs 15-20 higher than the projected IPO price in the unofficial market for trading in such shares.

The IPO is widely projected to be priced in the Rs 70-72 range, which would mean a 15-20 per cent grey market premium at present. Grey market premium is an indicator ultra-rich investors watch to gauge the likely listing gain that an IPO can offer.

Dinesh Gupta, co-founder of UnlistedZone and a grey market tracker, said the premium is likely to rise in the days ahead as the stock is very popular among investors.

Grey market watchers expect the company to raise over Rs 9,300 crore from the primary market, with about Rs 1,500 crore likely to come in via pre-IPO placement.

, the largest shareholder in Zomato, is looking to sell a stake worth Rs 700 crore through the public offering, while Zomato will raise the rest via fresh share issuances.

Gupta said the IPO would be a litmus test for domestic startups planning IPOs. “Zomato is among the top beneficiaries of Covid-19 related restrictions. We expect the company’s revenues to rise in the coming quarter,” he said.

There are speculations that the IPO will hit the market on July 19. However, the company is yet to make any formal announcement.

Zomato’s is one of the most-awaited IPOs of the year, as it will see the listing of one of India’s biggest startups funded by marquee private equity firms like Tiger Global Management and Fidelity, among others.

Abhay Doshi, Founder of UnlistedArena, said investors shall wait for more details on the issue. “Similar IPO is like Burger Kings were very successful thanks conservative pricing of the issues. Zomato must take note of that. We expect the company to leave something on the table for investors,” he said.

“The IPO mart is very busy this month and it is a mega issue. The company will have to cover the bases well,” Doshi said.

The current grey market premium for GR Infraprojects is Rs 350-355, 20-25 per cent of the IPO price of Rs 828-837. Clean Science and Technology is trading at Rs 480-485 in the unofficial market, a 55 per cent premium to the IPO price of Rs 880-900. Both issues will open for subscription on July 7.

“There is a lot of activity in the grey market as the primary market gets busy. Good valuations will help lift investor sentiments,” said Gupta of UnlistedZone.