Zomato Shares Rally Post SVF Block Deal

Shares of the foodtech giant Zomato continued their 5% rally from the previous day as the price increased 1% in the morning trade on Thursday (August 31), after SVF Growth sold 10 Cr equity shares in the company.

Zomato shares were trading at INR 100.7 at 9:26 AM on the National Stock Exchange. However, following the initial cheer, the company’s share price fell to INR 99.45 at 12:27 PM, slightly lower than Wednesday’s close.

To recap, SVF Growth sold a 1.16% equity stake in Zomato at INR 94.7 per share in a bulk deal on August 30, earning the SoftBank affiliate INR 947 Cr. SVF Growth’s shareholding in the company was 3.35% or 28.71 Cr shares as of June 2023.

SoftBank received a stake in Zomato following the foodtech giant’s acquisition of the quick commerce startup Blinkit last August. After the one-year lock-in period expired, the Japanese investment major moved to exit the startup. Recent reports suggest that the Japanese tech giant is looking for a complete exit from the foodtech giant. 

Goldman Sachs Investments, Copthall Mauritius Investment Fund, BNP Paribas Arbitrage, Franklin Templeton Mutual Fund, Axis Mutual Fund, Kotak Mahindra Fund, Morgan Stanley Asia Singapore and others were the buyers of the deal.

The listed food delivery giant has been on an upward trajectory this year. Since the start of 2023, Zomato’s share price has rallied by 65% on the bourses, outperforming both the BSE and the NSE by many multiples. The startup’s shares recently hit a new 52-week high of INR 102.85, with its shares frequently crossing the INR 100 mark.

The foodtech also posted a profit of INR 2 Cr in the April-June quarter, compared to a loss of INR 250 Cr in the same period last year. Revenue increased 70% year-on-year (YoY) to INR 2,416 Cr in the same period.

In other news, Tiger Global Management, another foreign investor in Zomato, sold its entire shareholding of 1.44% in Zomato for INR 1,123.85 Cr on August 28. The shares were offloaded by Internet Fund III Pte Ltd in an open market transaction.

The foodtech has recently started charging a platform fee to customers, which has been a key driver in its profitability. Zomato is charging between INR 2 and 3 per order, depending on the city, with the platform fee being rolled out to customers in Tier II and III towns first.