Zomato Share Price Rises 8.7% To INR 136 After First Quarterly Result Post IPO

Zomato’s share price closed at INR 135.8, rising 8.68% from the day’s opening of INR 122, on Wednesday (August 11) after the company declared its quarterly results on Tuesday for the first time post listing on the bourses. The stock also hit an intra-day high of INR 138.7 at 3:25 PM on the Bombay Stock Exchange.

The Gurugram-based foodtech company’s revenue from operations increased from INR 591.9 Cr in the quarter ended March to INR 757.9 Cr in June quarter on a standalone basis, growing 28% quarter-on-quarter. Meanwhile, adjusted EBITDA loss increased 42.66% from INR 120 Cr to INR 170 Cr in the same period, the company’s financials revealed.

However, the company’s loss attributable to equity shareholders fell to INR 356.2 Cr in the June quarter of FY22 from INR 812.8 Cr in the corresponding quarter last year.

“This (EBITDA loss) is largely on account of non-cash ESOP expenses which have increased meaningfully in Q1 FY22 due to significant ESOP grants made in the quarter pursuant to creation of a new ESOP 2021 scheme. This divergence in reported profit/loss and adjusted EBITDA will continue going forward,” the company said.

Zomato’s operating and adjusted revenues in the June quarter of FY21 were INR 2,191 and Cr INR 350 Cr, respectively. But the year-on-year growth seems to be unnaturally high since the first quarter of FY21 was severely impacted by the first wave of lockdowns in 2020.

As with all other gig economy companies, Zomato too has faced the ire of gig workers for an alleged decrease in pay amid the pandemic. However, the company refuted those claims, saying: “We added an additional fee for long distance and increase in fuel prices (among other variables) to ensure delivery partners are fairly compensated. The subsequent increase in their earnings per order is ~15% higher than what it was about a year ago.”

The company, which had its public listing on July 23, currently has a market capitalisation of INR 98,025 Cr and its shares were trading at INR 124.9 on the Bombay Stock Exchange at the end of the day’s trading on Tuesday (August 10).

Experts suggest that investors are betting big on the Indian market beyond Zomato to drive this demand. Valuation expert and professor of corporate finance at Stern School of Business at New York University, Ashwath Damodaran, noted in his blogpost on the day of the listing that the company’s shares should be valued at INR 41, almost half of the actual issue price of INR 76.

“That may seem like a lot to pay (INR 41) for a money-losing company with less than INR 20 Bn in revenues in the most recent year, but promise and potential have value, especially when you have a leader in a market of immense size. That said, the stock’s pricing (72-75 INR, per share) makes it too expensive,” he wrote.

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