Zomato tanks 14%, hits new low as lock-in for pre-IPO investors ends

Shares of Zomato hit a record low of Rs 46 as the stock of the food-delivery platform company tumbled 14 per cent on the BSE in Monday’s intra-day trade as the lock-in period of pre-IPO ended. The stock has dipped below its previous low of Rs 50.35 touched on May 11, 2022.

With today’s fall, Zomato now trades 39 per cent below its issue price of Rs 76 per share. The stock had hit a record high of Rs 169.10 on November 16, 2021. Zomato made a stock market debut on July 23, 2021.

At 10:15 AM, Zomato quoted 12 per cent lower at Rs 47.45 on the back of heavy volumes. In comparison, the S&P BSE Sensex was down 0.6 per cent at 55,725. The trading volumes at the counter jumped over three-fold with a combined 104.62 million equity shares changing hands on the NSE and BSE. In the past one month, the stock has underperformed the market by falling nearly 4 per cent, as compared to a 5.5 per cent gain on the Sensex.

Lock-in period of pre-IPO investors (promoters, employees & other institutions) of Zomato ended on July 23, 2022. “Following the lock-in period of one year, the pre-offer shareholders, may sell their shareholding in our company, depending on market conditions and their investment horizon. Further, any perception by investors that such sales might occur could additionally affect the trading price of the equity shares,” Zomato had said in a Red Herring Prospectus.

In terms of Regulations 17 of the SEBI ICDR Regulations, the entire pre-offer equity share capital will be locked-in for a period of one year from the date of allotment, other than equity shares which are successfully transferred as part of the offer for sale; and any equity shares allotted to employees, whether currently an employee or not, pursuant to the ESOP 2014, ESOP 2018 and ESOP 2021 prior to the offer, Zomato had said.

Meanwhile, according to Reuters report, Domino’s Pizza India franchise will consider taking some of its business away from popular food delivery apps, Zomato and SoftBank-backed Swiggy, if their commissions rise further.

The disclosure was made by Jubilant FoodWorks, which runs the Domino’s and Dunkin’ Donuts chain in India, in a confidential filing with the Competition Commission of India (CCI) which is investigating alleged anti-competitive practices of Zomato and Swiggy, the news agency reported. CLICK HERE FOR FULL REPORT

Technical View

Bias: Negative

Support: Rs 44

Resistance: Rs 60.20

Zomata has once again given a downside breakout at the lower-end of the its expected trading range as per the Bollinger Band on the daily chart. The near term bias is likely to favour the bears as long as the stock now trades below Rs 60.20.

According to the weekly chart, Zomato may now test its support at the lower-end of the Bollinger Band on the weekly chart at Rs 44-odd level.

Among the key momentum oscillators, the MACD and the DI index have turned in favour of the bears, while the Slow Stochastic and the 14-day RSI remain in oversold zone.

(With inputs from Rex Cano)

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