Shares of Indian food-delivery company Zomato plunged 14.3 per cent to a record low today, as a one-year lock-in period for promoters, employees and other investors came to an end following last year’s listing.
Zomato made a stellar debut on July 23 last year in the Mumbai market, but its shares have lost more than 60 per cent of their value since then.
“Investors are concerned about the sell-off through employees and promoters,” said Prashanth Tapse, VP of research at Mehta Equities.
Investors are also not comfortable with the acquisition of Blinkit, he said, adding that the fundamentals of the company were still good.
Including Monday’s losses, Zomato shares have lost nearly 30 per cent since the company announced its deal to buy local grocery delivery startup Blinkit in June.
Today, the stock posted its biggest intraday percentage drop since Janaury 24 in heavy-volume trade of 2.7 times the 30-day average.
The company now has a market value of 366 billion rupees ($4.58 billion), compared with 1.29 trillion rupees at its peak in November.
Analysts say Zomato needs to pump more money into Blinkit as the quick-commerce sector grows at a rapid clip, with rivals Swiggy, Reliance Industries-backed Dunzo, Tata-backed BigBasket and Zepto making big investments.
Zomato is scheduled to report its first-quarter results on August 1. The company had reported a 75 per cent jump in fourth-quarter revenue in May, while gross order value – or the total value of all food delivery orders on its online platform – surged 77 per cent year-on-year to a record high.
On Friday, Reuters reported that Domino’s Pizza’s India franchise will consider taking some of its business away from Zomato and Swiggy if their commissions rise further.
In February, Zomato reported a smaller third-quarter loss, helped by a one-time gain from a stake sale, while revenue jumped due to increased demand for restaurant meals.
Zomato’s dining out business, which offers customers discounts and offers when they eat out at partner restaurants, strengthened as eateries and bars reopened following a drop in Covid-19 cases during the quarter, while the company’s core food delivery business continued to grow.
“The revival of in-restaurant dining (in the third quarter) led to some green shoots in our dining-out ad-sales business,” the Gurugram-based firm said in a regulatory filing.
- Reporting by Nallur Sethuraman in Bengaluru; Editing by Subhranshu Sahu, of Reuters.