After several bunch trades in the early hours of Wednesday, Zomato stock was trading erratically.
In a block deal, the Chinese e-commerce behemoth Alibaba Group is reportedly planning to sell about a 3% share in the Indian food delivery company Zomato for $200 million.
According to the report, the block deal will be completed at a discount of approximately 6%.
The shares were up 0.16 percent at Rs. 63.65 on the BSE at 11:00. The company’s market value increased to Rs 54,431.85 crore.
It’s not the first time Zomato has been in the news; the stock dropped after the company’s co-founder, Mohit Gupta, left earlier this month after working there for approximately five years.
Uber completed a mass sale of its whole 7.78% share in Zomato in August 2022. According to the BSE filing, Uber sold 61.22 crore shares in Zomato for Rs 50.44 each, using the proceeds from the 2020 sale of Uber Eats.
Morgan Stanley has maintained its “overweight” call on Zomato with a target price of Rs 92 in a recent report. It claimed that Amazon’s decision to leave the Indian food delivery market has no appreciable consequences.
By the end of the year, Amazon Meal, a food delivery business in India, will cease operations. When the delivery service was first introduced about two years ago, it was only offered in Bengaluru and a few other select cities.
“Since its launch on the secondary market, Zomato has been in a downward trend. Technical information alone is insufficient for a descriptive analysis. However, based on recent price movement, the stock has been trading in a narrow range for a few trading weeks “Business Today was told by Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One.
“Zomato has been on a decline since it first appeared on the secondary market. A descriptive analysis requires more than just technical data. The stock, however, has been trading in a constrained range for a few trading weeks based on recent price action.” Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, spoke to Business Today.
The company continues to have a “Buy” recommendation from Kotak Institutional Equities, with a target price of Rs 100.
Swiggy’s revenues are greater and suggest a very high take-rate of 29.2% (food + Instamart combined), even though it had a smaller food delivery share than Zomato in 1HCY22.
Gaining market share in a competitive, duopolistic market is advantageous for Zomato.
As a result of global cost-cutting measures, Amazon reportedly closed its Indian meal delivery service. Despite Amazon’s small market share, incumbents will benefit from this consolidation.
“If you look at Paytm or Zomato, you’ll notice that senior executives left the companies after they generated significant wealth through the IPO and many of them pursued entrepreneurial endeavours. Although there may be trading rebounds, investors should still steer clear of these cutting-edge businesses that are attempting to balance expansion and profitability in the near future “said Green Portfolio’s founder, Divam Sharma.