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Zomato has been making the headlines for a different reason these days as the stock has been declining sharply.
The decline in the stock is said to be due to the end of the lock-in period for promoters, employees, and other shareholders. According to SEBI rules, pre-IPO shareholders have a mandatory lock-in period of 1 year if the company floating the IPO has no identifiable promoter.
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The lock-in period for these shareholders ended on 25th July 2022, the day from which the stock began tanking. On Monday, the stock witnessed a full gap-down opening as it opened at Rs 52.50 per share.
On the same day, the stock declined to close at Rs 47.60 per share, down 11.28% and touching a lifetime low of Rs 46 per share. Ishares India Mauritius Company sold around 28 lakh shares in a block deal at a price of 53.65 per share.
Tuesday was even worse for the stock as it fell a further 12.5% to close at 41.65 per share while hitting another lifetime low of Rs 41.20 per share. On the same day, the stock had its highest volume ever: 412.32 million.
At Tuesday's close of Rs 41.65 per share, the stock has declined 21% in a span of 2 trading sessions. From the firm's listing price of Rs 126.35, the stock has declined 67% in a year!!
The food delivery giant's acquisition of cash-strapped q-commerce firm Blinkit was also a contributing factor to the firm's decline. Moreover, Domino's Indian parent company, Jubilant Foods, announced that it will have to take its business away from Zomato and Swiggy if their commissions keep rising, in a confidential filing with the Competition Commission of India (CCI).
Zomato has been caught in several troubles recently alongside Swiggy. The National Restaurants Association of India (NRAI) had filed a complaint with the CCI while accusing the online delivery platforms of breaching neutrality while promoting their preferred sellers, misusing consumer data & charging exorbitant commissions.
Today, the stock opened even lower at Rs 40.85 per share and hit a fresh lifetime low of Rs 40.60 per share. The stock moved well in the early hours as it reached a high of Rs 44.40 per share within an hour of trading. It currently trades at around Rs 43, up 3.3%.
However, renowned brokerage Jefferies has maintained a positive outlook for the stock as the company is working towards better unit economics. Even though the stock has declined 54% in 6 months, the company is on track to break even in its food delivery business in the near future.
Jefferies has set a price target of Rs 100 for the Zomato stock.
Article by Aman Agarwal.
This news piece is brought to you in association with jobaaj.com
