Shares of Zomato Limited were under tremendous selling pressure on Monday and crashed 19 per cent to hit an all-time low of Rs 92.25 on BSE. The stock has tanked over 45 per cent from its 52-week high. The market cap of the firm fell to Rs 73,833.64 crore on BSE.
Zomato made a bumper debut on bourses with the unicorn hitting the Rs 1-lakh crore market capitalisation mark. The stock opened at Rs 116, 52.63 per cent higher on NSE against the issue price of Rs 76. The listing price on the Bombay Stock Exchange was at Rs 115, up 51.32 per cent.
The stock hit a 52-week high of Rs 169.10 on November 16, 2021. The shares of India’s first food unicorn startup have been falling for the last 5 trading sessions and are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
According to Abhay Agarwal, Founder, Piper Serica, the sharp correction witnessed in the recently listed Internet and tech stocks like Zomato are driven primarily by more than 10% correction in Nasdaq over the last month. With an increase in interest rates, tech investors seem to be taking money off the table for the time being.
“With all technical indicators flashing red we do not see any sharp rebound in tech stocks. At the same time, it is a good opportunity for long-term investors to add stocks like Zomato to the portfolio since it is a leader in a fast-growing industry that has only one other player. Also, since the company is well funded and has profitable unit-level metrics, we are not worried about the correction in valuation,” he added.
The food delivery firm reported better-than-expected topline figures for the quarter ended September 30. The company posted 21.29 per cent quarter-on-quarter (QoQ) and 140.42 per cent year-on-year (YoY) growth in consolidated revenue at Rs 1,024.20 crore in Q2FY22.
However, Zomato’s net loss widened to Rs 429.6 crore during the quarter under review mainly on account of investments in the growth of its food delivery business. Net loss stood at Rs 229.6 crore in the year-ago quarter and Rs 356.2 crore in the preceding quarter ended June 30. Brokerages on Dalal Street were bullish on Zomato post its Q2 result.
Finance Minister Nirmala Sitharaman, at the 45th meeting of the GST Council held in September 2021, announced the change in the tax regime for hyperlocal food ordering services.
She proposed that platforms such as Swiggy and Zomato should pay GST on behalf of their partner restaurants, including cloud kitchens and central kitchens, whose services are available through their apps. The proposal was accepted and came into effect from the first day of 2022, i.e. January 1.
