SYDNEY, June 20 (Reuters) - Shares of Australian Mexican

restaurant chain Guzman Y Gomez jumped more than

one-third on their first day of trading on Thursday, an upbeat

signal about investor sentiment following the country's biggest

initial public offering in a year.

The Sydney startup's stock first traded at A$29.90 at midday

local time (0200 GMT), a 36% premium to their A$22 issue price

and against a flat overall market.

Some 3.1 million shares, out of just over 100 million

issued, had changed hands by early afternoon.

The company put up A$335.1 million ($224 million) of new

stock, about one-sixth of the company, for trading. The share

price increase raises the company's market capitalisation to

about A$3 billion, from A$2.2 billion before its trading debut.

In its listing prospectus, the company forecast a second

consecutive net loss for 2024 but a profit in 2025 and outlined

a plan to match the current Australian store count of McDonald's

in 20 years.

Guzman Y Gomez's (GYG) initial issue was closed to the

public and largely involved selling shares to existing

financiers and franchise owners. The share price surge on

Thursday sends a hopeful signal about broader sentiment after

high interest rates and inflation squashed demand through 2022

and 2023.

Australian listings collapsed after a record 2021 as

pandemic stimulus payments ended and the central bank raised

interest rates to slow inflation. In 2024 so far, Australia has

raised just A$98 million in IPOs, the second-lowest June half in

more than a decade, according to LSEG data.

"It proves the adage that you can list a good company even

in a bad market," said Campbell Welch, an adviser at Novus

Capital who ran a small IPO for health services provider Freedom

Care in November, one of 32 new listings in the country

in 2023, compared with nearly 200 in 2021.

"It's pretty fully valued and a lot of things have to go

right now to justify the valuation."

A prospectus filed in May generated rolling headlines about

GYG's target of opening at least 30 stores per year from 183 in

Australia currently - a rate it has achieved just once, in 2023

- and about its omission of store lease liabilities and

share-based payments from earnings projections.

The company said its accounting treatment of expenses

was typical of franchise businesses.

"Once we're listed, the market will price us every day and

our focus will be on the things we can control: selling burritos

and delivering on our strategy," GYG founder and co-CEO Steven

Marks said in a statement before the start of trading.

The company was not immediately available for comment.

A Morningstar client note previously valued the stock at

A$15 a share, saying the company with 3.5% of the country's fast

food market had not established a competitive advantage which

would justify its rapid expansion.

($1 = 1.4990 Australian dollars)