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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

Food and grocery delivery behemoth <keyword id="6358977" type="General" weightage="20" keywordseo="Swiggy" source="Orion">Swiggy</keyword> is on a roll, pushing out multiple new services simultaneously, ahead of the festive season, and its much-touted Rs 11,664 crore IPO. Experts anticipate the IPO to hit the bourses in the upcoming months. Earlier last week, the company's shareholders had approved of raising the fresh issue component of the IPO, from Rs 3,750 crore previously to Rs 5,000 crore. This will allow Swiggy to add an extra Rs 1,250 crores to its coffers for future growth. The remaining Rs 6,664 crore will be an OFS (offer for sale), largely paving a way for Swiggy's old investors to exit. In the buildup to its IPO, the delivery giant is dialing up the competitive fever big time with rival <keyword id="19901323" type="General" weightage="20" keywordseo="Zomato" source="keywords" meta.keywordsubtype="org" meta.entityname="Zomato" meta.hostid="261" meta.entityid="Zomato">Zomato</keyword>, which went public in 2021. Swiggy recently launched <keyword id="23440051" type="General" weightage="20" keywordseo="XL-Fleet" source="keywords">XL Fleet</keyword> for large-scale <keyword id="20299302" type="General" weightage="20" keywordseo="food-delivery" source="keywords">food delivery</keyword> and Bolt, which is an <keyword id="23461052" type="General" weightage="20" keywordseo="AI-powered-logistics" source="keywords">AI-powered logistics</keyword> system. Per some media reports, the company is also launching an invite-only concierge membership program called the "Rare Club", which will have an annual fee of up to Rs 50,000. <h2>Who doesn't love a little pettiness? </h2>But that's not it. In the time being, Swiggy is also aggressively looking for ways to gain maximum public attention, one of which is by sponsoring the fourth season of the popular entrepreneurial reality show <keyword id="11924074" type="General" weightage="20" keywordseo="shark-tank-india" source="Orion">Shark Tank India</keyword>. But here's the catch-a key condition of this deal is to not bring back Zomato CEO <keyword id="19901325" type="General" weightage="20" keywordseo="deepinder-goyal" source="keywords">Deepinder Goyal</keyword> as a shark. Media reports suggest that Swiggy is set to close on a massive Rs 40-60 crore sponsorship deal with the show. But in a seemingly low-ball move, Swiggy has blocked the return of Zomato CEO Deepinder Goyal as one of the investors on the show. Goyal had made his debut on the third season of the show, and was looking to make a comeback alongside long-time regulars such as Anupam Mittal, Aman Gupta, Namita Thapar and Peyush Bansal. <h2>Bolting ahead with XL</h2>In a move that clearly underlines its ambitious expansion plans, Swiggy also recently announced the launch of its new XL Fleet service, which will look to cater exclusively to bulk orders and large-scale food deliveries. Per Swiggy's co-founder Nandan Reddy, XL is a natural evolution of Swiggy's services. As it is, a recent report by Bain and Company highlighted that India's food services market is set to double to a massive Rs 9 trillion by 2030, surging up significantly from its current standing of Rs 5.5 trillion. Not just that, the customer base is also set to expand from 320-340 million as of 2023 to 430-450 million by the end of the decade. Earlier this year, Zomato had also stepped in this segment by launching its large-order electric fleet, which could serve orders for a gathering of up to 50 people. Alongside this, Swiggy has unveiled Bolt, which is an AI-powered logistics system specifically designed to optimize delivery routes, predict demand patterns, and improve overall operational efficiency. The aim is to bring down on delivery time and costs, giving Swiggy a massive competitive edge in the growing food and quick delivery market. With this feature, Swiggy claims that users can get certain meals such as burgers, <h2>Challenges Await </h2>As of FY24, Swiggy's operating revenue stood at ₹112.5 billion, a 36% jump from the previous year. The company also managed to reduce its net losses by as much as 44% to ₹23.5 billion. While these may come across as positive signs, which are also pushing the company's unlisted shares to new heights, Swiggy significantly lags behind Zomato in both food delivery and quick commerce segment. Consider this. Per Morgan Stanely, as of FY24, Swiggy's GOV (gross order value) at Rs 24,700 crore, was far lower than Zomato's Rs 32,200 crore. Swiggy's GOV and AOV grew at a CAGR of 15.5% and 2.5% respectively, between FY22-24. In contrast, Zomato's GOV and AOV registered a CAGR of 23% and 3.7%, respectively. At 12.7 million, Swiggy's MTU (monthly transacting users) for FY24 were also a far cry behind Zomato's 18.4 million. Even when it comes to average order value (AOV), Swiggy's Instamart lags behind Zomato's Blinkit. This is also why analysts believe that despite Swiggy narrowing the gap on most key metrics like AOV, GOV and more, the company's share will command a lower valuation than that of its rival Zomato.

Ahead of much awaited IPO, what is Swiggy upto? Launching XL Fleet, premium membership and kicking out Zomato CEO

<keyword id="19898109" type="General" weightage="100" keywordseo="Paytm" source="keywords" meta.keywordsubtype="org" meta.entityname="Paytm" meta.hostid="261" meta.entityid="Paytm">Paytm</keyword>'s parent company, <keyword id="20253123" type="General" weightage="20" keywordseo="One97-Communications" source="keywords" meta.keywordsubtype="org" meta.entityname="One97 Communications" meta.hostid="261" meta.entityid="One97 Communications">One97 Communications</keyword>, declared its Q2FY25 results today, announcing a one-time, exceptional profit of Rs 1,345 crore during the quarter, thanks to the sale of its entertainment ticketing business. The company's PAT (profit after tax) stood at Rs 930 crore. Notably, without this windfall gain, Paytm's finances would still be in red, with the company racking up losses worth Rs 415 crore. Paytm was in red in the year-ago period as well, incurring losses worth Rs 290.5 crore. This windfall profit also improved Paytm's EBITDA by Rs 388 crore on a QoQ basis. The company's revenue also saw a slight uptick of 10.5% quarterly to Rs 1,659 crore, as opposed to Rs 1,501 crore in the previous quarter. But on a year-on-year basis, Paytm's revenue dipped significantly by 34%. The company also announced that it has entered into a DLG (<keyword id="23641220" type="General" weightage="20" keywordseo="Default-Loss-Guarantee" source="keywords">default loss guarantee</keyword>) model for its merchant loans of about Rs 225 crore with SMFG India Credit. Under this arrangement, Paytm will be first in line to take a hit in case of a loss that emerges from borrowers defaulting or skipping their payments. "Following the regulatory framework and the emerging market practice, we see increased willingness from lenders to partner and allocate more capital in the default loss. The DLG model will help to increase disbursements with the existing partners and expand partnerships with new lenders for the loan distribution,” said the company in its earnings release today. The company's revenue from its payment business also inched up 9% on a quarterly basis, along with its revenue from <keyword id="19976433" type="General" weightage="20" keywordseo="financial-services" source="keywords">financial services</keyword>, which also grew by 34% QoQ. At present, Paytm's total merchant subscriptions stand at 1.12 crore, with the company garnering 3 lakh new merchants during the quarter. During the previous quarter, Paytm's <keyword id="20253122" type="General" weightage="20" keywordseo="gross-merchandise-value" source="keywords">gross merchandise value</keyword> (GMV) also inched up by 5% on a sequential basis, which experts anticipate will continue in the coming quarters, just as India braces for the festive season. Per its release, Paytm aims to achieve <keyword id="23641219" type="General" weightage="20" keywordseo="EBITDA-profitability" source="keywords">EBITDA profitability</keyword> (before ESOPs) by the fourth quarter of this financial year. However, investors remained unimpressed with Paytm's performance, with its share slipping by around 3.96% during the day to trade at Rs 697.20. The stock has a YTD (yield-to-date) of 7.91% during the year.

Paytm declares Q2 results, earns Rs 930 crore as windfall gains by way of sale of ticketing business to Zomato

<ul><li><keyword id="830092" type="General" weightage="20" keywordseo="zomato" source="Orion">Zomato</keyword>’s promise to turn net profit positive in a year has cheered investors. </li><li>Margins in its core food delivery business has hit a multi-quarter high. </li><li>The worry? Monthly transacting users and gross order value has declined versus the previous reported quarter. </li><li>Nomura believes Zomato will find it difficult to achieve double-digit contributory margin with high growth in the long term </li></ul>Two years after it listed on the bourses, Zomato is on a recovery path. The stock which hit a high of over ₹150 per share fell sharply subsequently to below ₹50 a piece. However, the last quarter (Q1FY24) has seen a recovery from that level and it has now surpassed its listing price of ₹76. The stock has been rising steadily in the last three weeks, after its Q4 earnings report where it turned EBITDA positive in its core business, without including Blinkit, its quick commerce business. EBITDA is net income (earnings) with interest, taxes, depreciation, and amortisation. Moreover, the management also promised to turn positive not just at the consolidated adjusted EBITDA level but also at the profit after tax level in a year. Financial services company, JM Financial says this commitment is the ‘cherry on the cake’. “Tough macro posed growth headwinds but management showed urgency on profitability and that was despite the Gold programme launch,” said Jefferies. Zomato Gold is a subscription plan that offers free deliveries within a 10-kilometre radius for orders above ₹199. During the quarter, as many as 30% of the gross order value, from 1.8 million customers, came from Gold. The Gold plan could hurt its contributory margins (CM) because of its inability to charge every order. Yet, as of Q4, its CM in core food delivery business are comfortable after hitting a multi-quarter high. Contributory margins represent the incremental money generated for each unit sold after deducting the variable portion of the costs. “The core business milestone was achieved mainly on the back of solid expansion in the food delivery contribution margin to 5.8% in Q4 vs 5.1% in Q3. This was because profitability levers such as improvement in restaurant commissions and ad income, and lower discounts/variable cost offset the adverse impact of Gold launch,” said JM Financial. Ordering effects After the post-pandemic boom effects faded away, a lot of consumption patterns have changed, also evident in consumer spending on fast food — impacting growth in quick service restaurants. These headwinds have been impacting Zomato as well. The growth in Zomato’s food delivery business seems to have flatlined. Food gross order value declined 2% quarter-on-quarter, even as it grew 12% year-on-year. Moreover, its monthly transacting users (MTU) declined by 5% QoQ to 16.6 million, while growing at 6% YoY. Apart from the one-time impact of its decision to exit from 225 cities, the company attributes MTU decline to optimised marketing spend and withdrawal of the human support interface for abusive customer cohorts. “Also because of Zomato Gold, the MTUs have come down and not gone up because we do see an impact of clubbing some orders in the same households, which might have just a single membership,” Akshant Goyal, chief financial officer of Zomato said in an earnings concall. The management, however, remains confident about food delivery ordering going up in the first quarter of FY24. Analysts, on the other hand, are not too confident about their ability to sustain growth beyond the first quarter as summer holiday and IPL impact during April/May are one-off events. Its other businesses, however, continue to display good growth. Blinkit’s gross order value grew 17% QoQ, while order volume grew 24%. Revenues of Hyperpure, its business to supply ingredients to restaurants, grew 13.5% QoQ. Offsetting margins with growth While it’s on a path to profitability, Zomato is also caught between a rock and a hard place — of growth versus margins. To boost growth, it will have to go in for discounts – the lack of aggressive discounting by all players is already visible in the moderation in food ordered during the IPL season, generally a big occasion for online food platforms. This year, the IPL spike in food ordering was at a modest 7% for the industry as compared to the 2020 IPL when it was over 50%, as per Redseer. This time, there were no high <a href="https://www.businessinsider.in/business/news/ipl-2023-sees-tier-2-cities-order-more-on-swiggy-zomato/articleshow/100673879.cms">decibel ads along with deep discounts.</a> Like other players in the business, the company will also find it tough to keep up with the high margin trajectory, while also chasing growth. “Overall, we lower our growth assumptions for its food delivery’s gross order value growth, from around 20% to around 17%, but raise our FY24F contributory margin estimate from 5.8% to 6.5%. We continue to believe Zomato will find it difficult to achieve double-digit contributory margin, with high growth in the long term,” said Nomura. Restaurant commissions grow but may hit an ONDC wall In the last two years, the company was also able to improve take rates or the commissions it charges restaurants consistently. Its take rates are now close to 18%. “Broadly, with our take rates, the mission is to be competitive, and we are lower than what the competition is charging. So, as we continue to add more value to restaurant businesses, we expect some improvement in commission revenue going forward,” said Goyal. But competition is heating up in the sector. The Department for Promotion of Industry and Internal Trade’s Open Network for Digital Commerce (ONDC) has breached the territory that was hitherto dominated by Zomato along with Swiggy. On the face of it, it might seem like restaurants might be offered better terms on ONDC. While Zomato will be able to compete with ONDC on efficiency and also even overall costs – as third party deliveries might be costlier– HSBC Global Research believes that it might flatten growth. “Estimates for food delivery revenue in the long term remain largely unchanged. Our short-term estimates change slightly as we build in a marginally slower increase in take rate,” the research firm said. In spite of short-term and long-term challenges ahead, Zomato seems to have settled into its listed company status to deliver value to investors by chasing topline growth instead of customers, with discounts.

With Zomato rallying over 25% in the past month, street looks at the road ahead

Amid the ongoing startup gloom comes good news in fintech unicorn <keyword id="19944449" type="General" weightage="20" keywordseo="incred" source="keywords">Incred</keyword> which has posted Rs 109 crore in profit in FY23 as compared to Rs 31 crore in FY22, a more than 3.5 times growth. Incred's revenue surged 77.46 per cent to Rs 866 crore during FY23 from Rs 488 crore in FY22, according to its financials with the Registrar of Companies (RoC). The finance cost (interest expenses) was up 62.6 per cent to Rs 356 crore in FY23 from Rs 219 crore in FY22, as the company scaled its operations, according to an Entrackr report. Incred has likely built a loan book of Rs 7,500 crore within the last six years. Late last month, the fintech lender became India's second unicorn of 2023 (the other being quick commerce startup <keyword id="19939134" type="General" weightage="20" keywordseo="zepto" source="keywords">Zepto</keyword>) after raising $60 million from new and existing investors. <keyword id="20112130" type="General" weightage="20" keywordseo="incred-wealth" source="keywords">InCred Wealth</keyword>, the wealth management subsidiary of InCred, led the funding round with investing $36.76 million, followed by MEMG Family Office at $9 million. Ravi <keyword id="20112129" type="General" weightage="20" keywordseo="pillai" source="keywords">Pillai</keyword>, Chairman at RP Group of Companies, and <keyword id="19960548" type="General" weightage="20" keywordseo="ram-nayak" source="keywords">Ram Nayak</keyword>, Co-Head of Deutsche Bank, invested $5.4 million and $1.2 million, respectively. InCred Special Opportunities Fund VCC, Singapore-registered entity of InCred, Varanium Capital Advisors and NABS <keyword id="20112128" type="General" weightage="20" keywordseo="vriddhii" source="keywords">Vriddhii</keyword> also participated in the round. With this funding, InCred is now valued at more than $1.03 billion. The firm last raised $68 million in a debt funding round from public sector banks and public financial institutions. <keyword id="19901323" type="General" weightage="20" keywordseo="zomato" source="keywords">Zomato</keyword> in 2022 entered into a strategic partnership with fintech lender InCred for "hassle-free" credit facilities. SEE ALSO:<a href="https://www.businessinsider.in/business/auto/webstories/mercedes-benz-gls-gets-11-lakh-more-expensive-in-india-after-facelift/slidelist/106637475.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/webstories/mercedes-benz-gls-gets-11-lakh-more-expensive-in-india-after-facelift/slidelist/106637475.cms" target="_blank">Mercedes-Benz GLS gets ₹11 lakh more expensive in India after facelift</a><a href="https://www.businessinsider.in/sports/webstories/indias-t20-squad-for-afghanistan-show-world-cup-trials-are-on/slidelist/106633092.cms" target="_blank"></a> <a href="https://www.businessinsider.in/sports/webstories/indias-t20-squad-for-afghanistan-show-world-cup-trials-are-on/slidelist/106633092.cms" target="_blank">New and veteran names in India’s T20 squad for Afghanistan show World Cup trials are on</a><a href="https://www.businessinsider.in/business/auto/webstories/top-10-electric-cars-sale-in-india-in-december-2023/slidelist/106627784.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/auto/webstories/top-10-electric-cars-sale-in-india-in-december-2023/slidelist/106627784.cms" target="_blank">Tata Motors dominates the EV car market in December with Tiago leading the charge</a>

You Searched For "zomato investors" and got 5 results

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

Ira Alok Puranik

Ahead of much awaited IPO, what is Swiggy upto? Launching XL Fleet, premium membership and kicking out Zomato CEO

Ira Alok Puranik

Paytm declares Q2 results, earns Rs 930 crore as windfall gains by way of sale of ticketing business to Zomato

BI India Bureau

With Zomato rallying over 25% in the past month, street looks at the road ahead

Katya Naidu

Fintech unicorn Incred logs Rs 109 cr profit in FY23, revenue up over 77%

IANS

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