Food delivery platform Zomato has given a big blow to investors in the last six months. The stock of Zomato has lost 65 per cent from its all-time high and thus has wiped out Rs 87,800 crore of its investors. Zomato’s stock fell to a 52-week low of Rs 57.65 on Friday. Its stock recorded a sharp decline of 6 percent during the opening hours of the market. At present, the Zomato share price on BSE is Rs 58.30. On Friday, Zomato’s market capitalization declined to Rs 45,381.69 crore, its lowest since listing. This is Rs 87,732.69 crore less than its peak cap of Rs 1,33,144.38 crore in November. Zomato stock touched an all-time high of Rs 169.10 in November 2021.
Zomato has wiped out more than half of its value so far in the year 2022. Recently, BofA Securities downgraded Zomato’s rating from ‘buy’ to ‘neutral’ and lowered the target price to Rs 80 from Rs 115. According to the brokerage, in the current rising interest rate scenario, investors are focusing more on profitability rather than revenue growth. On the other hand, Zomato continues to be a loss making company, which is focused on revenue.
IPO was a super hit, but then…
Zomato was listed on the stock market in July 2021. Zomato raised Rs 9,375 crore through its IPO last year. The company had witnessed bumper bidding and investors placed bids worth over Rs 3 lakh crore for the issue. The sell-off in Zomato’s stock comes at a time when almost all tech stocks, including those listed in the US, are suffering. Analysts are optimistic about these counters in the long term and believe that volatility will continue to haunt them in the short term.
Which investors reduced stake
Institutional investors reduced their stake in Zomato in the March 2022 quarter. Domestic mutual funds sold 83 million equity shares, or 1.1 per cent, to hold 2.82 per cent stake in the company. FPIs have sold 68 million equity shares or 0.9 per cent stake in the company to hold 10.17 per cent stake. However, the holding of individual shareholders in Zomato increased by 2.07 per cent to 9.07 per cent.
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