Zomato shares crash to record low after mandatory lock-in period ends

Last year, Zomato had opened up its IPO, raising close to $1.3 billion and lured the investors including Morgan Stanley and Fidelity Investments. China-based Ant Group was an early holder which was owning a stake of about 16 per cent before the share sale.

Shares of food delivery and restaurant platform Zomato plunged after the end of lock-up period of investors that had stakes in the company before its initial public offering (IPO), Bloomberg reported.

As per reports, the stock dropped by 14 per cent to a record low of 46 rupees. As per the Bombay Stock Exchange (BSE) website the shares traded at 52 week high of ₹169.10 and 52-day low of ₹46. The shares had closed at ₹53.65 on Friday.

Zomato's mega public issue saw a subscription of over 38 times, receiving a robust response from all investors last year.(Reuters Photo)

Last year, Zomato had opened up its IPO, raising close to $1.3 billion and lured the investors including Morgan Stanley and Fidelity Investments. China-based Ant Group was an early holder which was owning a stake of about 16 per cent before the share sale.

After a surge following the debut about one year ago, Zomato shares pared those gains to now trade about 40% below the IPO price. That compares to a 4.9% increase for the Nifty 50 Index over the same period.

Zomato’s successful IPO last year set the tone for the coming-out parties of a generation of Indian unicorns, including digital-payments firm One 97 Communications Ltd. But their shares have also plummeted as doubts persist about the valuations of loss-making technology firms, particularly as global macroeconomic uncertainty mounts. The digital payment platform's shares closed at 743.10, much lesser than the issue price of ₹2,150 per share when the IPO was opened. PayTM hit a 52-week high of ₹1,961 and a low of ₹511.

The company is competing against deeper-pocketed rivals including Amazon.com Inc. and Naspers Ltd.-backed Swiggy, presenting hurdles in how quickly it can become profitable. Its recent acquisition of fellow startup Blinkit in quick-commerce, another high-competition, high-cash-burn segment, has left investors unimpressed.

The delivery giant reported a smaller-than-expected loss for the March quarter. Some analysts anticipate Zomato will narrow its red ink over time, and point out that the meal-delivery market remains in its infancy.

(With Bloomberg inputs)