[wealthdesk shortname=”Zomato” isinid=”INE758T01015″ bseid=”543320″ nseid=”ZOMATO” sector=”Online Services” exchange=”nse”]
Zomato shares fell as much as 14.26 percent in early trade on Monday, hitting an all-time low, as one-year lock-in period for pre-IPO shareholders ended on July 23.
The stock was trading at Rs 47 per share, down 12.4 percent, on the BSE at the time of writing.
The shares have been under pressure lately, post the Blinkit deal in which the company’s board approved the acquisition of the startup for Rs 4,447 crore in an all-stock deal.
The stock has hit multiple 52-week lows in the last few weeks. It had touched a 52-week high of Rs 169.1 on November 16, 2021.
According to the norms, the equity share capital held by a company — that does not have promoters — is locked for a period of one year from the date of allotment of shares. This effectively means the shareholders cannot sell any equity during the stated period.
Zomato’s total paid-up capital of the one-year overhang is about 78 percent and a sell-off pressure was expected to be seen this week.
However, market expert Prakash Diwan believes the downside for Zomato is fairly limited from a business standpoint.
“So if you look at the unit economics, they are far more superior to what they were when they came up with the IPO. So there’s a huge improvement there. But since it’s too small at this point in time or too late the day to improve the price, you’ll probably have to give it much more time,” Diwan said in an interview with CNBC-TV18.
“So if you have patience, probably you will see those Rs 70-75 levels at some point in time on Zomato again,” he said.
Zomato management told CNBC-TV18 the company “will be able to add over 7 million monthly transaction users each year over next 10 years”. They added that the company is looking at both growth and profitability rather than just growth.
On Zomato’s acquisition of Blinkit, the management said that it sees a lot of synergies between the two.
The food delivery company was listed on BSE and NSE on July 23, 2021, at a strong premium of over 51 percent.