Zomato’s stock experienced a remarkable uptick of up to 6 percent in the initial trading hours on Monday. This surge was propelled by substantial trading activity and the revenue generated from platform fees charged by the food delivery aggregator. Notably, the stock has yielded impressive returns to investors over the past several months, making it a highly profitable investment.
Based on exchange data, there were several instances of block deals involving Zomato shares at the outset of the trading session. The significant trading volumes provide validation for this occurrence. However, as of the time of preparing this report on Monday, the identities of the buyers and sellers have not been determined.
As per data provided by BSE, Zomato saw a trading of more than 152.4 million shares, equivalent to a value of INR 1,388.81 crore, by 10 am on Monday. Similarly, on the National Stock Exchange (NSE), a volume of over 46.2 million shares, totaling INR 431.30 crore, had been exchanged by the same time.
Shifting focus, Zomato has introduced a platform fee of INR 2 per order for select users, and this initiative has been further extended with an increased fee structure. In specific tier-II cities, the fee has been raised to INR 3 per order. Notably, the previous exemption granted to Zomato Gold subscribers from this fee has now been rescinded.
At the commencement of trading on Monday, Zomato’s shares exhibited a robust surge of up to 6 percent, reaching INR 96, propelled by the recent developments and trading volumes. However, these gains were subsequently relinquished to some extent, with the price retreating to INR 93. The company’s total market capitalization stood at over INR 80,000 crore. In the previous trading session on Friday, the stock had settled at INR 90.94. Noteworthy is the fact that Zomato’s shares have experienced a remarkable ascent, surpassing 116 percent from their 52-week low of INR 44.35, a level attained in January of the current year.
Following the conclusion of the Blinkit deal, the lock-in period for investors concluded on Friday, August 25th. Consequently, the shares acquired through the Blinkit deal will become available for trading on Monday. Notably, SoftBank owned a 3.35 percent stake in the food delivery aggregator Zomato, whereas other notable investors like Sequoia Capital and Tiger Global also held substantial stakes in the company.
In August 2022, Zomato successfully finalized the purchase of Blinkit, a quick commerce company previously known as Grofers, along with its associated warehousing and supplementary services division. This acquisition had been announced by Zomato in June 2022, receiving approval from its board for the transaction valued at INR 4,447 crore. The calculated value for Zomato shares issued to SoftBank amounted to INR 70.76 per share.
In the quarter of June 2023, Zomato achieved a significant milestone by achieving profitability for the very first time. The food aggregation platform company disclosed a consolidated profit after tax amounting to INR 2 crore, marking a noteworthy contrast to the loss of INR 186 crore incurred during the corresponding period in the previous year. Impressively, the revenue generated from operations demonstrated a substantial year-on-year growth of 71 percent, surging to INR 2,416 crore in Q1FY24 from INR 1,414 crore in the analogous period of the preceding year.
Morgan Stanley, a prominent international brokerage firm, has upheld an ‘overweight’ rating for Zomato, accompanied by a target price of INR 115 per share. The global investment bank noted that the sustained implementation of Zomato’s platform fee has the potential to catalyze enhancements in the company’s profitability.