Zomato share price: Zomato shares continued to fall on Thursday, marking the fourth straight session of the fall. The food delivery giant’s stock has fallen by about 25 percent since Monday after the company acquired fast delivery company Blinkit for Rs 4,447.5 crore in an all-stock deal.
From a startup trying to solve the “hunger problem” to the first Indian unicorn to enter public markets, Zomato’s journey has been a turbulent one thus far.
The listing of the food delivery company in the Indian stock markets opened up opportunities for a bunch of young startups. In 2021, when Zomato was listed as a publicly traded company, everyone welcomed it with great euphoria. It didn’t take long for the company to face headwinds and market volatility.
The latest round of corrections wiped Rs 11,680 crore from investors’ pot as the market cap fell from Rs 47,366 crore from Rs 35,686 crore in four days.
Stock price history
Currently, Zomato’s shares are 28 percent below the issue price of Rs 76, while the counter has taken a big hit of 67 percent from its 52-week high of Rs 169.10 in November 2021.
What do analysts say?
Explaining the relevance of Blinkit to Zomato’s business, Founder and CEO Deepinder Goyal stated that, like food delivery, Blinkit is also a hyper-local company and fulfills the need for rapid delivery of products to customers.
While several equity research firms and their analysts said the deal would contribute to Zomato’s business in the longer term, the drop in share prices indicates that investors are not so confident that the acquisition will add value to the company.
Analysts say Zomato adding another loss-making company to its portfolio has hurt investor sentiment. The possibility of a higher cash burn has also made investors cautious.
Meanwhile, Kotak Institutional Equities Research has already downgraded the stock to ‘add’ from ‘buy’ and lowered its fair value estimate to INR 77 from INR 83. “We believe Blinkit will require investments beyond the $400 million Zomato envisioned, given the increasing competition intensity,” the research firm added.
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