Zomato Limited saw a 1.12 percent increase in the morning trade on July 24. The surge came after the renowned food delivery platform disclosed its decision to commence the liquidation process for its wholly-owned subsidiary based in Portugal.
In an after-market-hour filing on July 21, Zomato Limited stated that Zomato Media Portugal, its subsidiary, was not considered a material component. Consequently, the liquidation of this subsidiary would have no impact on the turnover or revenue of the food aggregator. Despite this disclosure, the company did not provide a specific reason for the decision to liquidate the subsidiary, which currently remains inactive in terms of business operations.
As of 10:02 am, Zomato’s shares were trading at INR 81.60 on the National Stock Exchange, exhibiting a 1.62 percent increase from the previous day’s closing price. Notably, the company’s shares have witnessed a substantial 33 percent gain since the beginning of the year.
Starting from January 1, Zomato has taken steps to commence liquidation proceedings for five of its subsidiaries and also de-registered one subsidiary. These subsidiaries were located in Indonesia, New Zealand, Australia, Jordan, and Portugal. Despite these actions, Zomato Limited has reassured that its revenue and turnover will remain unaffected by the liquidation process.
According to brokerage firm Motilal Oswal, they have assigned a “buy” rating to the stock with a target price of INR 80, indicating a potential upside of 24 percent for the stock.
“With dominant market share and strong growth in the food delivery business and Hyperpure, we expect Zomato to report a strong 36 percent revenue CAGR over FY23-25,” said Motilal Oswal in a May 22 report.
Hyperpure functions as a B2B platform specialized in providing kitchen supplies to hotels, restaurants, and catering businesses.
In FY23, Zomato experienced a significant 65 percent surge in revenue, reaching INR 7760 crore. However, the food aggregator managed to narrow its net loss by 19 percent compared to the previous year, bringing it down to INR 971 crore. During the same period, the Earnings Before Income Tax Depreciation and Amortisation witnessed a decline of 2212 basis points, settling at 6.81 percent.
