Hi, I had a question non Zomato IPO? Does the success of Zomato mean that Indian investors are OK to invest in loss making digital IPOs?

In fact, you have raised a fantastic question and let me try and answer you as to why the Zomato IPO was so important for IPO markets. In fact, it has taught us a lot of important points. Let me bring out 4 such points in response to your query.

· Firstly, it is a myth that Indian investors do not want to invest in digital IPOs and Zomato just proved that. The Zomato IPO overall got subscribed 38 times and this was not a small IPO but a Rs.9375 crore IPO. While retail investors showed enthusiasm, it was the FPIs and DFIs, who went overboard to get allotment. Zomato has underlined that the days of digital IPOs had arrived and Indian investors are hungry for such IPOs.

· Secondly, Zomato shattered the myth that investors will not buy loss making companies. They are fine if the story is good, logical and compelling. Now companies don’t have to go to the US or Singapore markets for demand. It is right here in Indian markets. Investors putting money in Zomato IPO knew perfectly that it was loss-making and will continue to make losses for few more years. But, that hardly deterred investors.

· Thirdly, it is now a myth that Indian markets cannot absorb mega IPOs. In the past, mega IPOs attracted limited interest from HNI, QIB and retail investors. That was visible in Coal India, ONGC and NHPC. Interestingly, retail investors took the lead in filling up the book before HNIs and QIBs joined the bandwagon. Size is not really constraint for the success of an IPO, if the story is right; and that was proved by Zomato.

· Lastly, it disproved the belief that Indians invest in IPO only to exit on listing. In Zomato, retail investors showed willingness to take a longer-term view. This is an interesting departure but that is largely due to the stellar show by IPOs in last one year. Most IPOs performed extremely well post listing, even in the midst of the pandemic. In a way, Zomato could be a sort of watershed for IPO markets!