Talabat IPO performance took an interesting turn on its first trading day on the Dubai Financial Market (DFM) this Tuesday. After an initial surge of over 7%, the food delivery firm’s shares ended 6.87% lower by the close of the day. The stock opened at AED 1.70 per share, rising 7.5% briefly, but eventually fell to AED 1.49, a drop of AED 0.11.
On its debut, Talabat saw heavy trading activity, with 737.48 million shares exchanged across 18,519 trades, amounting to AED 1.188 billion in value. It was the most traded stock of the day. Despite this, the DFM index closed down by 1.11%, settling at 4,794.11 points.
A Major UAE IPO Closes the Year
Talabat’s IPO marked the final large-scale public offering of 2024 in the UAE markets. The company sold 4.66 billion shares last month, representing 20% of its total issued capital, raising $2 billion. The overwhelming demand during the book-building phase prompted an increase in the offering size, attracting investors locally, regionally, and internationally.
At the final offer price, Talabat’s market capitalisation stood at AED 37.3 billion ($10.1 billion).
Strong Fundamentals and Promising Outlook
Talabat serves over 6 million active customers monthly across eight countries, covering a population of over 71 million, according to Redseer Strategy Consultants. The firm is seen as a key player in the MENA tech ecosystem, with its IPO considered a milestone for the region’s technological growth.
Vijay Valecha, chief investment officer at Century Financial, noted that while the IPO opened with strong demand, the stock closed cautiously.
“Priced between AED 1.50 and AED 1.60 per share, Talabat was valued at $10.2 billion at the upper range. The stock opened at AED 1.70, showing a 6.25% rise from the offer price, indicating high investor interest. However, it later fell to AED 1.43 before closing at AED 1.49. Compared to the significant gains seen with UAE’s state-backed IPOs, recent private debuts like Lulu, Al Ansari, and Spinneys have displayed more moderate performances, prompting profit-taking,” Valecha explained.
Despite the early fluctuations, Talabat’s financials remain robust. The company reported AED 6.16 billion in revenue for 2023, a 21% increase from 2022, and a net profit of AED 1.08 billion, reflecting a 40% rise.
“Talabat’s price-to-sales ratio is 6.04, and its P/E ratio based on 2023 earnings is 34.5. Its 17.53% net profit margin outshines regional peers, indicating a strong position for continued growth. Given its market leadership and solid performance, the company’s valuation seems reasonable despite initial volatility,” added Valecha.
Final Thoughts
While Talabat’s debut day saw a mix of highs and lows, the company’s strong fundamentals and market leadership suggest long-term growth potential. The IPO is another step forward for the UAE’s expanding tech sector and a sign of the growing appetite for private company listings in the region.
