SoftBank, the Japanese tech investor, has set its sights on divesting a 1.1% stake in the Indian foodtech giant Zomato. As reported by CNBC-TV18, this strategic move is scheduled to take place on Friday, October 20th, with the intention of garnering at least INR 1,023.6 Crore, which translates to approximately $123 million.
According to insider sources, the report indicates that SoftBank’s SVF Growth Fund (Singapore) is planning to offload 9.3 crore shares in Zomato, with an expected price range set between INR 109.4 and INR 111.65 per share. Notably, the lower end of this range reflects a discount of over 2% when compared to the stock’s closing price on Thursday. The stake sale is being overseen by Kotak Securities on behalf of the investors.
On August 30, SoftBank, the technology investor, divested 1.16% of its holdings in the prominent foodtech company, netting a total of INR 947 crore. During that same month, reports emerged that this Japanese tech investor had realized exits totaling $5.5 billion from its India portfolio since establishing operations in Mumbai in late 2018. Impressively, $1.5 billion of these exits were achieved within the last 12 to 18 months.
Recent months have also seen US-based hedge fund Tiger Global making waves by selling a 1.44% stake in Zomato and exiting the company through open-market transactions, resulting in INR 1,123 crore in proceeds.
Investors have been actively divesting their holdings, seeking to capitalize on the foodtech major’s impressive performance in the stock market.
SoftBank’s decision to sell its stake comes in the wake of Zomato’s recent collaboration with the major ticketing company, IRCTC, to provide pre-ordered meal deliveries to train passengers as part of a pilot project. Subsequently, the foodtech giant’s stock has achieved 52-week high values on multiple occasions, earning praise and positive recommendations from various brokerages.
Zomato’s stock has surged by 88.28% year-to-date.
Just last week, Kotak Institutional Equities issued a BUY rating for Zomato’s stock, along with a target price of INR 125 per share. The brokerage firm observed that the company’s gross merchandise volume (GMV) growth had reached its lowest point in the first quarter (Q1) of the financial year 2023-24 (FY24), with a 14% year-on-year (YoY) increase. However, they anticipated an upward trend for the foodtech major beginning in Q2 FY24.
In the meantime, JM Financial, another brokerage firm, also emphasized the significance of the second quarter (Q2) for Zomato as a pivotal period to demonstrate its capacity to maintain profitability.
During the first quarter of the financial year 2023-24 (Q1 FY24), the company recorded a food delivery gross order value (GOV) of INR 7,318 crore, while Blinkit reported a GOV of INR 2,140 crore for the same period.
Overall, Zomato posted its first profitable quarter in Q1 of the financial year 2023-24 (FY24), reporting a profit after tax (PAT) of INR 2 crore, a notable reversal from the INR 186 crore net loss in Q1 FY23. In a similar vein, the operating revenue for the quarter ending in June 2023 surged to INR 2,416 crore, a substantial increase compared to the INR 1,413.9 crore in Q1 FY23.
On Thursday, October 19, Zomato’s shares concluded the trading session 1.33% down, settling at INR 111.7 on the BSE.