Zomato’s Eight-Session Winning Streak Ends, Slumps Over 5% On Wednesday

Shares of foodtech giant Zomato slumped 5.4% to INR 74.07 on the BSE on Wednesday (June 14), ending its eight-session winning streak. 

The shares were on a rising spree since June 2 and crossed the IPO price band of INR 72-76 last Friday. The stock also touched its 52-week high level amid this rally.

The decline today came after Zomato informed the stock exchanges last night that its step-down subsidiary Zomato Australia Pty Limited, located in Australia, has been deregistered, effective from June 11, 2023. 

It must be noted that the company had announced earlier on March 31 that the liquidation process of the subsidiary, along with its New Zealand subsidiary, Zomato NZ Media Private Limited, had begun.

Zomato said that neither of the subsidiaries had any active business operations. Besides, they were not material subsidiaries of Zomato, so the dissolution wouldn’t affect the revenue of the foodtech giant.

As per Zomato’s red herring prospectus (RHP), Zomato Australia Pty Limited had a royalty income of INR 5.3 Lakh in the year ended March 31, 2021.

Zomato has taken several restructuring measures over the last few quarters in its bid to turn profitable. In March this year, it liquidated Zomato Ireland Limited – Jordan, another step-down subsidiary based in Jordan.

In UAE, where Zomato used to operate in partnership with Kuwait-based food delivery app Talabat, the company discontinued rendering services in November last year.

Besides, during its Q3 FY23 results, Zomato said it exited around 225 smaller cities in India during the period due to poor performance.

With such restructuring measures in place, Zomato announced achieving adjusted EBITDA profitability, excluding quick commerce business, in Q4 FY23.

Besides, despite muted growth in food delivery, Zomato’s net loss narrowed 48% year-on-year (YoY) to INR 187.6 Cr in the quarter.

Shares of Zomato have gained over 14% since the beginning of May this year.

Meanwhile, Zomato continues to face troubles over its ‘Kachra’ advertisement released on World Environment Day. Despite the company taking down the controversial advertisement, it has now received a notice from the National Commission of Scheduled Castes.

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