Zomato Shares Recover From Recent Slump, Rise Over 5% Earlier Today

New Delhi, July 27: Shares of new-age food delivery company Zomato recovered some of the losses that it incurred during the past two sessions. On Wednesday morning, the shares rose over 5 per cent to trade at Rs 43.85.

On Monday and Tuesday, the shares of the company took a strong hit after the one-year mandatory lock-in period for promoters, shareholders, and others ended. The lock-in period refers to that period for which investments cannot be sold or redeemed.

Listed on July 23, 2021, the food aggregator's initial public offering was a success as it was subscribed 38.25 times. It made a stellar debut at a premium of 53 per cent. At present, the share price of Zomato is, however, around 70 per cent from its peak of Rs 169. Even though the company reported healthy gains on its listings on the stock exchanges in July last year, it could not capitalize on it further.

Zomato's Board of Directors recently approved a proposal to acquire the cash-strapped quick commerce company Blinkit for Rs 4,447 crore. Blinkit was earlier known as Grofers. It believes the acquisition will help increase Zomato's hyperlocal delivery fleet utilization and reduce the cost of delivery.

Similar to Zomato, several others too have witnessed sizable gains on their exchange debut in the past one-year period, but later underperform and fall sharply from their all-time highs.

Analysts believe that these companies lacked systematic direction and well-planned focus, while others attributed the slump to an extremely high valuation.

Another reason for investors to be cautious is that the recent volatility in globally markets has changed investors' mindset to invest in new age stocks to traditional defensive stocks, Mohit Nigam, Head - PMS, Hem Securities had said.

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