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Think Initial Public Offers (IPOs) are a sure-shot, quickfire method to make a quick buck? If so, then investing in some of India's biggest IPOs to date would have created multiple millionaires. However, if the data is to be believed, 18 out of India's top 30 IPOs by way of size have failed to deliver on the returns front. Recent data from Capitalmind PMS suggests that of all the mega IPOs India has seen in the past 2 decades, only 12 IPOs i.e. stocks of 12 companies have delivered more returns that what you would have received, had you bought and held your investments in Nifty500(which invests in biggest 500 companies by market size). Infact, Paytm (54%), <keyword id="20024191" type="General" weightage="20" keywordseo="Reliance-Power" source="keywords" meta.keywordsubtype="org" meta.entityname="Reliance Power" meta.hostid="261" meta.entityid="Reliance Power">Reliance Power</keyword> (81%), General Insurance Corporation (2%) actually generated negative total returns to date. The only outliers in the list of top 10 IPOs were Zomato (listed in July 2021) and Coal India (listed in April, 2010), which managed to generate excess returns i.e. more than what was generated by Nifty500. While Zomato's total return to date, which is considered a comprehensive gauge of a stock's profitability, stands at 265%, Coal India total returns are a massive 443%. In these cases, had you simply bought and held the Nifty500 index for a similar duration, your returns would've been 73%, and 435% respectively. Also, 5 of the biggest IPOs India has ever seen (Bajaj Housing Finance, Bharti Hexacom, Brainbees, Ola Electric) have come in the last 2 years. In some cases, having stayed put in your index investments would have yielded you far better returns. Consider this, FSN E-Commerce, Nykaa's parent company, listed on the exchanges on November 2021. Its total returns till date have been 2%, while had you invested in Nifty500 index, your returns would've been 53%. Similarly, the total returns to date on Bandhan Bank's stock, which listed in March 2018, was a negative 43%. But, the index has delivered a whopping 163% returns during the same time. Hits and Misses <table class="redcator-table-advance"><tbody><tr><td>Company Name</td><td>Total Returns to Date (In %)</td><td>CNX (Nifty500) Returns (In %)</td></tr><tr><td>Reliance Power (Feb 2008)</td><td>-81</td><td>961</td></tr><tr><td>Zomato (July 2021)</td><td>265</td><td>73</td></tr><tr><td>Gland Pharma (November 2020)</td><td>14</td><td>124</td></tr><tr><td>NHPC (September 2009)</td><td class="se-table-selected-cell">389</td><td>961</td></tr><tr><td>Indian Railways Finance Corporation (January 2021)</td><td>582</td><td>109</td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>Source: CapitalMind PMS <h2>Surge in IPOs? Not really </h2>It is impossible to overlook the sheer number of public offerings seen in the Indian markets over the past 2 years. Around 600 share sale offers have already hit the market since 2023. Out of these, 335 have come in this year, as of October 2024. While over Rs 50,000 crores have been raised by these share sales so far since 2023, only 22% of these funds raises have come from companies who are hitting the market for the first time i.e. bringing out their IPOs. The rest have come from already listed companies seeking to raise more funds. The biggest IPO that India has seen to date, that of <keyword id="19906087" type="General" weightage="20" keywordseo="Hyundai" source="keywords" meta.keywordsubtype="org" meta.entityname="Hyundai" meta.hostid="261" meta.entityid="Hyundai">Hyundai</keyword> Motor India, closes for subscription today. With an offer size of Rs 27,870.16 crore, it is 35% bigger than the previous biggest IPO in the country(LIC in May 2022). As of 12:30 pm today, Hyundai's offer had been 87% subscribed, with significant interest from QIBs and employees. At 0.43x, participation of retail investors remained largely subdued. Notably, an IPO is considered cancelled and withdrawn, if it fails to meet the 90% subscription threshold.

Do large IPOs guarantee large returns? Data suggests that 18 of India's biggest 30 IPOs did not generate solid returns

Zomato-owned quick commerce platform <keyword id="12724311" type="General" weightage="20" keywordseo="blinkit" source="Orion">Blinkit</keyword> has shut down over 100 dark kitchens in Delhi, Gurugram, Faridabad, Ghaziabad, Noida, and Greater Noida for the past three days due to the ongoing delivery worker strikes, and it is expected that a larger number of stores will also go offline in the coming days, according to reports. Delivery executives are opposing a change in their compensation system, which they allege will result in lower profits. The media reports said that about 50-60 stores in Gurugram have closed, with more closures expected in Noida and Delhi as the new fee structure is implemented. In addition, customers in the region have been facing difficulties placing orders at offline stores that use the Blinkit app. These locations are currently marked as 'temporarily unavailable' due to ongoing maintenance, which has prompted several customers to voice their concerns on social media. Blinkit operates approximately 400 dark stores in 20 cities throughout the country, with a significant presence in the Delhi-NCR region, where half of its stores are located. Meanwhile, Zomato's consolidated loss widened to Rs 346.6 crore (year-on-year) for the quarter that ended December 31, against a loss of Rs 63 crore in the same period last year, the company said. The company said that adjusted revenue witnessed a 66 per cent growth to Rs 2,363 crore (YoY). "We think that the current slowdown is a result of a few temporary factors -- macro slowdown for the mid-market segment, boom in dining out for the premium-end, and boom in travel at the premium-end," he said in the company's earnings results. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rbis-mpc-decisively-in-a-rate-pause-territory-as-inflation-cools-down/articleshow/99497132.cms">RBI's MPC 'decisively' in a rate-pause mode as inflation cools down</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/zepto-preps-for-public-listing-in-2-years-brings-in-ramesh-bafna-as-cfo-to-lead-ipo-process/articleshow/99514143.cms">Zepto preps for public listing in 2 years; Brings in Ramesh Bafna as CFO to lead IPO process</a>

Over 100 Blinkit dark kitchens shut in Delhi-NCR due to delivery boys' strike

<ul><li><keyword id="476451" type="PERSON" weightage="20" keywordseo="Deepinder-Goyal">Deepinder Goyal</keyword> noted India is a really tough market to operate in. </li><li>Zomato made a strong debut on the stock exchange on Friday, at a premium of 51%. </li><li>The company will use this capital to acquire more companies to expand its presence.</li></ul> Zomato’s chief executive officer (CEO) and co-founder Deepinder Goyal, in a blog post published only a few hours before the company’s listing on the bourses on Friday, said that Zomato and Swiggy are two of the best food delivery apps in the world. Goyal noted that India is a really tough market to operate in and if someone is building to succeed in India, they are already exceptional. He also confessed that Zomato has a long way to go before they can call themselves world class by the customers’ standard, but the company is determined to get there. “I’m a firm believer in India, and where our country will be in the future. India is a tough market to operate in, but if you are building to succeed in India, you are already exceptional. I say that because I believe Zomato and Swiggy are two of the best food delivery apps in the world today,” he said in the <a href="https://www.zomato.com/blog/letter-from-deepi">blog post</a>. Goyal also spoke about Zomato's initial public offering (IPO), saying that the tremendous response to its IPO has given the company the confidence that the world is full of investors who appreciate the long term view of its business. <div type="ExtQuote" text="“Today is a big day for us. A new Day Zero. But we couldn’t have gotten here without the incredible efforts of India’s entire internet ecosystem. Jio’s prolific growth has set all of us up for unprecedented scale. Flipkart, Amazon, Ola, Uber, Paytm – have also over the years, collectively laid the railroads that are enabling companies like ours to build the India of the future.”" auname="Deepinder Goyal, CEO, Zomato"></div> Zomato made a strong debut on the stock exchanges on Friday, July 23, as its shares <a href="https://www.businessinsider.in/business/news/zomato-makes-a-strong-public-market-debut-at-51-premium-shares-open-at-115/articleshow/84667265.cms" data-type="tilCustomLink">opened at ₹116</a> on the national stock exchange (NSE). This represented a premium of 51.32% over the issue price of ₹76. At 10.18 a.m, Zomato shares were trading at ₹132.00 on the NSE, up 72%. The company plans to use this capital, from public issue, for organic growth, inorganic growth and general corporate purposes. The inorganic growth will include mergers and acquisitions (M&amp;A) as well as investment in tech and customer acquisition. Founded in 2008 by Deepinder Goyal and Pankaj Chaddah, Zomato has marked its presence in every continent, except Antarctica, through acquisitions and its subsidiaries. In India, the company has over 1.61 lakh delivery partners across 526 cities. SEE ALSO <a href="https://www.businessinsider.in/cryptocurrency/news/rbi-finally-explains-its-problem-with-cryptocurrencies-and-why-cbdcs-are-safer/articleshow/84666785.cms" data-type="tilCustomLink">India finally explains its problem with private cryptocurrencies and why it is coming up with its own CBDC</a> <a href="https://www.businessinsider.in/science/news/there-are-very-solid-engineering-reasons-why-jeff-bezoss-rocket-looks-exactly-like-you-know-that-/articleshow/84655433.cms" data-type="tilCustomLink">There are very solid engineering reasons why Jeff Bezos' rocket looks exactly like, you know, that</a> <a href="https://www.businessinsider.in/tech/news/mark-zuckerberg-said-he-wants-to-transform-facebook-from-a-social-media-company-into-a-metaverse-company/articleshow/84659377.cms" data-type="tilCustomLink">Mark Zuckerberg said he wanted to transform Facebook from a social-media company into 'a metaverse company'</a>

Zomato and Swiggy are best food delivery apps in the world, says Zomato’s CEO

<ul><li>Zomato’s shares get listed at ₹116 on the NSE, translating into a 51% premium. </li><li>The company launched its initial public offering last week, at a price band of ₹72-76.</li><li>Zomato’s issue was oversubscribed by 38 times.</li></ul>Zomato made a strong debut on the stock exchanges on Friday, July 23, as its shares opened at ₹116 on the national stock exchange (NSE). This represented a premium of 51.32% over the issue price of ₹76. At 10.18 a.m, Zomato shares were trading at ₹132.00 on the NSE, up 72%. Zomato ended the first day of trade about 8% above the listing price, at ₹125.30. The company’s market cap stood at ₹1.06 lakh crore at 10.16 a.m. Zomato was supposed to make its stock exchange debut on July 27, but the company preponed its listing date by four days to Friday. The company launched its initial public offering (IPO) last week between July 14 to 16 at a price band of ₹72-76. The minimum order bid was kept at one lot of 195 equity shares. At a price of ₹76 per share, one lot cost up to ₹14,820. Zomato’s issue was oversubscribed by <a href="https://www.businessinsider.in/business/startups/news/zomato-ipo-to-open-on-july-14-with-shares-priced-at-72-76-apiece/articleshow/84226269.cms">38 times</a>, as it attracted bids for 2,751 crore compared to the issue size of 71.9 crore shares. The shares reserved for Qualified Institutional Buyers (QIBs) were oversubscribed by 51 times. Meanwhile, Non-institutional investors' reserve was oversubscribed by 32 times and Retail Individual Investors (RII) share was oversubscribed by seven times. “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,” Zomato’s CEO Deepinder Goyal, wrote in a blog post earlier today. A day before its public listing, on July 13, Zomato raised <a href="https://www.businessinsider.in/business/startups/news/zomato-raises-4197-crore-from-186-anchor-investors-oversubscribed-by-35-times/articleshow/84399035.cms">₹4,197 crore</a> from 186 anchor investors. The company had allotted 55.22 crore equity shares to these anchor investors for ₹76 per equity shares to some marquee investors like Government of Singapore, Morgan Stanley Investment Fund, Tiger Global Investment Fund, Baillie Gifford Pacific Fund and more.

Zomato makes a strong public market debut at 51% premium

IPO watch: List of upcoming public issues in 2021 – from Zomato to GoAir, over a dozen companies have filed for a listing

<ul><li>While Zomato’s sales have been increasing, the food delivery giant is still unable to make profits on account of huge expenses led by discounts and marketing.</li><li>It posted a net loss of ₹1,222 crore for the March quarter, which is an increase of nearly 50% since last year.</li><li>However, analysts believe the food delivery business has a huge potential as it is estimated to be a $110 billion opportunity by 2025.</li><li>Both Zomato and its rival Swiggy together hold 90-95% market share in India’s food delivery business.</li></ul>Food delivery company Zomato has been reeling under the pressure to turn profitable since July last year, <a href="http://a-strong-public-market-debut-at-51-premium-shares-open-at-115/articleshow/84667265.cms">the day it went public </a>and raised over ₹9,000 crore from the public. Since its listing, Zomato investors have seen their wealth decline by half, and there seems to be no letting up yet. Brokerages believe there might be a chance for the company to woo investors in a few years as there lies a huge opportunity in front of them. According to a report by JM Financial, Zomato’s path to operational profitability (also known as EBITDA profitability) requires two things. EBITDA is short for earnings before interest, taxes, depreciation and amortisation. “We believe order volumes and contribution margin per order are two key variables that would determine Zomato’s path to profitability. Our analysis suggests the company can turn profitable in FY25 on a cash EBITDA basis if it were to reach annual order volumes of 1 billion (2.5x FY20 levels) and a contribution margin of around ₹21 per order,” said the report. Adding to it, the report says it sees a ramp-up beyond the food ecosystem can also provide incremental growth. It expects Zomato to follow global peers in terms of expanding beyond food delivery and explore adjacencies in the form of grocery delivery, alcohol delivery, medicine delivery, on-demand delivery and insta shopping. Its recent investment in Grofers and a majority stake in Fitso is a validation of expansion into adjacent areas, states the report. Gen Z population offers attractive growth opportunities to Zomato The number of online shoppers in India is <a href="https://www.businessinsider.in/business/ecommerce/news/india-will-have-more-ecommerce-users-by-2025-than-us-population/articleshow/92062424.cms">expected to grow </a>to 300- 350 million by FY25 from 100-110 million in FY20 according to Bain &amp; Company. “With around 10 million monthly active users, the current penetration rate for Zomato within the online product shopper base works out to around 10%. We expect this penetration to increase to around 15% over the next 5 years, effectively growing the monthly active user base of Zomato to 45 million by FY26,” said the report. The brokerage expects the growth to be driven by the growing share of millennials/Gen Z in the ‘earning’ population and fast-growing e-commerce penetration beyond Tier-1 cities. Customer addition remains strong, but 9 out of 10 orders are from old users New customer additions by Zomato remained strong in Jan-Mar with around 5.5 million new additions. However, more than 90% of its food delivery business is being driven by repeat users compared to new users. “The company expects growth in the near term to be driven by repeat customers as there is substantial room for improvement in average annual ordering frequency (which is around 10 per user per year),” said the report by JM Financial. Zomato now operates in more than 1,000 cities across India as it added 300 plus new cities in Jan-Mar. Top 8 cities contributed around 60% to gross order value. However, its losses continue to swell, ballooning by nearly 50% in the March quarter to ₹1,222 crore, when compared to the previous year. Some analysts believe the change in the company’s performance needs to happen soon to turn around the loser story. “With the current inflation, the margins will lower further due to increased cost of fuel, raw materials etc. Acquiring different companies won’t help much in expansion, rather it will make management more difficult,” said Majoj Dalmia, founder and director at Proficient Equities. “Existing management needs to be optimised for profitability; the growth prospects will depend on current performance and not future, if there is a turnaround now, then we can expect some good growth story,” he added. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[]]></cdata></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="http://www.businessinsider.in/business/startups/news/pepper-content-raises-14-million-to-enter-the-us-market/articleshow/92084581.cms">INTERVIEW: Pepper Content skip the traditional Middle East route, heads directly for the US market</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="http://www.businessinsider.in/stock-market/news/wipro-yes-bank-tata-power-among-stocks-to-watch-out-for-on-june-9/slidelist/92094551.cms">Wipro, Yes Bank, Tata Power among stocks to watch out for on June 9</a>

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Do large IPOs guarantee large returns? Data suggests that 18 of India's biggest 30 IPOs did not generate solid returns

Ira Alok Puranik

Over 100 Blinkit dark kitchens shut in Delhi-NCR due to delivery boys' strike

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Zomato and Swiggy are best food delivery apps in the world, says Zomato’s CEO

Kritti Bhalla

Zomato makes a strong public market debut at 51% premium

Kritti Bhalla

IPO watch: List of upcoming public issues in 2021 – from Zomato to GoAir, over a dozen companies have filed for a listing

Rounak Jain

Zomato’s path to profitability in the next three years requires two things, say analysts

Bhakti Makwana

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