Irrational exuberance over Zomato

Zomato is essentially a "concept stock" because it has neither made profits, nor has issued any guidance on ever getting to profitability, notes Shyamal Majumdar

Food delivery platform Zomato had investors eating out of its hand last week. Its initial public offering (IPO) drew bids worth $46.3 billion and was nearly 40 times oversubscribed. While retail investors came out in large numbers, big institutional investors also placed major bets, with the subscription for their category at 52 times the shares on offer. Even before the IPO opened, Zomato raised $562 million from 186 big financial investors, including marquee names such as Tiger Global, BlackRock, JPMorgan and Morgan Stanley.

Indian stock markets haven’t seen such euphoria over a company which flagged in its IPO draft prospectus that