Zomato Shares Continue To Tank, Fall Over 5%

Zomato shares fell by 5% on the National Stock Exchange (NSE) to settle at INR 61.50 on Thursday (April 5). 

The foodtech giant’s stock has been under pressure for the last few months.  On Wednesday, the startup’s shares tanked by more than 7% to close at INR 64.90. The trend continued on Thursday, as Zomato shares opened at INR 64.80 and fell to its all-time low of INR 60.50 during the day.

In the last 5 months, Zomato shares have fallen by more than 55%, wiping out more than half of investors’ wealth. In the last one month, the foodtech giant’s shares have tanked by about 28%.

Zomato made its stock market debut on July 14 last year. Defying estimates, the shares opened at a premium of 53% over its IPO price, clinching a market capitalisation of INR 1 Lakh Cr. The trajectory continued as Zomato shares reached their all-time high of INR 160.30 on November 15, 2021. 

Then came the free fall. By March 2022, the share prices had almost halved, hovering in the range of INR 80-82. 

However, the recent two-day decline in Zomato shares can be attributed to the Reserve Bank of India’s (RBI’s) surprise announcement on Wednesday to hike the repo rate by 40 basis points. It also increased the cash reserve ratio by 50 basis points to 4.5%. The announcement sent shockwaves through the markets, wiping off more than INR 6.27 Lakh Cr worth of investor wealth in a single day on April 4. 

The BSE Sensex plunged by more than 1,400 points on Wednesday to close at 55,669.03. The tepid response continued as BSE Sensex gained barely 33 points to close at 55,702.23 on Thursday.

On the other hand, the NSE Nifty dropped 391 points on Wednesday to settle at 16,677.60 points. On Thursday, it gained 5 points to end the day at 16,682.65.

Zomato shares have also been hit by the probe ordered by the Competition Commission of India (CCI) in the alleged ‘unfair pricing tactics’ employed by the foodtech startup. 

Meanwhile, institutional investors have also been slashing their stake  in Zomato. Foreign Institutional Investors (FIIs) decreased their stake to 10.44% in the March 2022 quarter from 11.31% in the December 2021 quarter. Mutual Funds also decreased their holdings to 2.82% in the March 2022 quarter from 3.88% in the December 2021 quarter.