Shares of Zomato touched a record low on Monday, as the mandatory lock-in period for promoters, employees and other investors came to an end, a year after the food delivery provider made a stellar debut on the Indian bourses.
While the company debuted at a 53% premium last year, its shares have lost about 72% of their value from the all-time peak of Rs 169.10 and are trading about 38% below the issue price of Rs 76 per share.
According to media reports, Zomato’s total market cap was hovering at about Rs 36,500 crore on Monday as against Rs 1.33 lakh crore at its peak. Investors have lost about Rs 96,600 crore of notional value, thanks to the sharp wealth erosion in the counter.
More than 613 crore shares of Zomato were under lock-in from the date of allotment, which ended on Saturday. These shares constitute roughly about 78% of the shareholding of the company. Key shareholders of the company include Uber BV, InfoEdge, AntFin Singapore and Alipay.
A lock-in period is a time frame during which investors in a public issue cannot sell their allotted shares. However, once the lock-in period ends, investors are free to sell their investments.
The Indian food delivery industry, which is expected to breach the $10-billion GMV mark by 2025, is dominated by two market leaders — Swiggy and Zomato — constantly vying for a bigger share of the market.
According to industry estimates, both Swiggy and Zomato process around 1.5 million orders daily. However, these numbers do not translate to profits, leading to both the companies experimenting in other areas, including grocery delivery.
For Zomato, even though revenue grew 75%, the company’s expenses nearly doubled, leading to a loss of Rs 360 crore in its latest quarterly earnings report.