Mon, 25 Jul 2022 01:22 PM IST
The food delivery app, Zomato on Monday witnessed a sharp fall of 14.3 per cent in its shares after a one-year lock-in period for promoters, employees and other investors came to an end following a 2021 listing. The lock-in period is the period for which investments cannot be sold or redeemed.
According to a report of the news agency, ANI, the shares of the listed company traded at Rs 47.45, down 11.6 per cent from the previous close at 11:11 am on Monday.
Earlier, the company on July 23, 2021 made a stellar debut in the Mumbai market, however, it has lost the value of its shares of over 60 per cent since then.
Punit Patna, Equity Research Analyst, Swastika Investmart, while speaking about the same said, “Zomato Ltd. has witnessed a significant underperformance since its listing and has fallen a whopping 71 per cent from its all-time high price. The company has been shunned by the investors post the beginning of the rate hike cycle by the central banks globally and the huge sell-off in the tech sector.”
“Therefore, we are averse to Zomato Ltd. despite its strong position in the online food service platforms and the current correction,” he added.
Recently, the food aggregator company Zomato's Board of Directors passed a proposal to acquire the cash-strapped quick commerce company Blinkit for Rs 4,447 crore. Blinkit which was previously known as Grofers believes the acquisition will help increase Zomato’s hyperlocal delivery fleet utilization and reduce the cost of delivery.
Similar to Zomato, several others too have witnessed sizable gains on their exchange debut in the past one year, but later underperform and fall sharply from their all-time highs.
Analysts believe that these companies lacked systematic direction and well-planned focus, while others attributed the slump to an extremely high valuation.
(With agency inputs)