As Share Price Tumbles, Zomato Allots 4.65 Cr ESOPs Worth $24.19 Mn

Online food aggregator, Zomato has allotted 4.65 Cr shares of INR 1 face value under its stock option plans 2018 and 2021 to employees from the company as well as subsidiaries. The value of the shares, with respect to the closing price on July 26 2022 of INR 41.5 is INR 193.19 Cr ($24.19 Mn).

Under the 2018 plan, Zomato alloted 63.5 Lakh ESOPs while under the 2021 scheme, it gave 4.02 Cr shares. This way, the company’s total share allotment now stands at 792.02 Cr shares, up from 787.36 Cr shares.

In a letter to the stock exchanges, the listed startup wrote, “With reference to [the] subject, we wish to inform you that the nomination and remuneration committee of the board of directors of the company at its meeting held on July 25, 2022, has approved the allotment of 4,65,51,600 equity shares having a face value of INR 1 each, as fully paid-up, to identified employees of the company and its subsidiaries upon exercise of vested options.”

This development comes at a time when Zomato’s stock is not performing well on the bourses. The share price of Zomato hit a new low at INR 41.5 on July 27, 2022, going down by more than 47% in the last three months.

While Zomato had an impressive stock market debut, it has wiped over 45% of the value from its offer price within a year of listing.  

The current fall has been attributed to the intense sell-off post the expiration of the one-year lock-in period for Zomato’s promoters, company employees, founders, and others. Zomato’s Blinkit acquisition has also added to investors’ woes.

Despite the tumble, US-based investment bank Jefferies has maintained its ‘buy’ rating on Zomato, with a price target of INR 100 (an upside scenario of INR 160 and the downside scenario of INR 40).

Previously, too, when Zomato’s price tumbled to hit the then low of INR 58.65, Zomato’s CEO Deepinder Goyal donated $90 Mn worth of his ESOP proceeds to the Zomato Future Foundation for the company’s gig workers.

The foodtech giant is also working with India’s antitrust watchdog Competition Commission of India (CCI) to assist with an investigation into the conduct of the foodtech platform and its rival Swiggy.

Update | July 27, 2022 1:45 PM

The story has been updated to reflect the correct value of the ESOPs.

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