Zomato delivers impressive listing gains, but should you hold or sell? Check what experts say

New Delhi: Zomato made an impressive listing on Indian bourse on Friday (July 23), as its shares zoomed nearly 53 per cent in its debut trade against its issue price of Rs 76, offering bumper returns to investors who were allotted the stocks against their bids. On the first day of trade, Zomato shares closed at Rs 125.85, higher by Rs 10.85 or 9.43 per cent from the issue price of Rs 76 per share, valuing the food delivery giant at around Rs 98,731.59 crore.

However, experts are expecting swings in Zomato share prices in the next trading session which will be on Monday (July 26) next week. According to Vinod Nair, Head of Research at Geojit Financial Services, "For successful IPO allocation, though the listing is much above the expectations, current investors can hold on to their shares as this new business is forecasted to grow at the high digit in the early stage of the cycle. For new and existing investors, can accumulate on a short to medium-term basis, as the trend of stock price stabilises."

"A key factor for the stock price to sustain this euphoria is to demonstrate improvement in profitability in the coming quarters. The company is highly expected to turn into profit from current loss, else the performance will be impacted," he told IANS.

Meanwhile, there are several questions around the valuation of the food delivery company, since it is yet to earn a profit. However, being in a duopoly with Swiggy, investors are likely to bet on the vast opportunities in front of Zomato.  

"Despite the large size of IPO at Rs 9,375 crore and rich valuations, the company saw a healthy overall subscription of 38 times. There is a lot of fancy for such a unique and first of its kind listing in the market. Zomato with first-mover advantage is placed in a sweet spot as the online food delivery market is at the cusp of evolution," Sneha Poddar, Research Analyst, Broking & Distribution, Motilal Oswal Financial Services Ltd. told PTI. Also Read: Ulefone Power Armor 13 with 13200mAH battery launched: Features, price

Zomato’s stellar debut is a testimony to investors’ growing confidence in new-age companies with disruptive business models. Also Read: Tesla seeks reduction in import duties on electric cars: Report