UAE: Talabat shares drop 6.8% on Dubai market debut

Vijay Valecha, Khaleej Times, December 11, 2024

Talabat shares ended 6.87 per cent down on debut on the Dubai Financial Market on Tuesday after opening over 7 per cent higher soon after listing on the market.

The food delivery firm’s shares fell Dh0.11 to Dh1.49 per share after opening at Dh1.7 per share on the first trading day of its listing. After rising 7.5 per cent soon after the opening, its share reversed and ended lower.

Bitcoin, the world's first and biggest cryptocurrency, soared past the $100,000 mark last week, leaping 40 per cent in the two weeks after Donald Trump won the US elections, as the market embraced the incoming US administration's pro-crypto stance.

Its counter saw 737.482 million shares changing hands worth Dh1.188 billion in 18,519 trades. It was the most active stock on the day. The Dubai Financial Market also closed lower, falling 1.11 per cent to 4,794.11 points on Tuesday.

Talabat was the last big company in a series of initial public offerings (IPOs) that hit the UAE markets this year.

Talabat last month sold 4,657,648,125 shares, equivalent to 20 per cent of the company’s total issued share capital, raising $2 billion. The total offering size was increased during the book-building period to accommodate significant demand from international, regional and local investors.

Based on the final offer price, Talabat’s market capitalisation upon listing was Dh37.3 billion ($10.1 billion).

Redseer Strategy Consultants said Talabat serves over 6 million monthly active customers across eight countries, addressing a population of over 71 million.

“Talabat has been a cornerstone of Mena's tech ecosystem, and its IPO represents a significant moment in the region's technological evolution,” it said.

Vijay Valecha, chief investment officer, Century Financial, said Talabat’s IPO opened with strong demand but ended more cautiously.

“Priced between Dh1.50 and Dh1.60 per share, the offering valued the company at $10.2 billion at the top end. The stock opened at Dh1.70, a 6.25 per cent jump from the offer price, reflecting high investor interest. However, it quickly dropped to Dh1.43 and closed at Dh1.49. While UAE IPOs of state-backed companies have historically seen strong first-day gains, recent private company debuts like Lulu, Al Ansari, and Spinneys have shown more muted movements, likely contributing to profit-taking among investors,” said Valecha.

Despite the initial volatility, he added that Talabat’s fundamentals remain strong.

“For 2023, the company reported revenue of Dh6.16 billion (up 21 per cent from the previous year) and net profit of Dh1.08 billion – a 40 per cent increase. At the top of the price range, the company’s price-to-sales multiple stands at 6.04, and its P/E ratio is 34.5 based on 2023 earnings,” he added.

“Furthermore, its net profit margin of 17.53 per cent is far above the single-digit margins of its regional peers, suggesting that the company is well-positioned for sustained growth. Considering its market leadership, strong performance, and growth prospects, its valuation appears reasonable despite the early stock fluctuations,” said CIO of Century of Financial.

Source

Khaleej Times