Updated: Jul 15
Zomato Stock Price: On Thursday, Zomato shares fell once more, making it the company's fourth straight session of decline. Since Monday, when the company announced that it had bought the fast-commerce delivery company Blinkit for Rs 4,447.5 crore in an all-stock deal, the stock of the food delivery giant has fallen by almost 25%.
Zomato's path thus far has been a rollercoaster from a business that intended to address the "hunger" problem to becoming the first Indian unicorn to reach public markets.
The meal delivery company's registration on Indian stock exchanges gave several small businesses new prospects. Everyone greeted Zomato's listing as a public company in 2021 with considerable elation. It didn't take long for the company to begin experiencing difficulties and market instability.
As its market capitalization dropped from Rs 47,366 crore to Rs 35,686 crore in just four days, the most recent round of correction has wiped off Rs 11,680 crore from investors' coffers.
Stock Price History
Zomato shares are currently 28% below the issue price of Rs 76, while the counter has suffered a significant loss of 67% from its 52-week high of Rs 169.10 reached in November 2021.
What Do Analysts Say?
Deepinder Goyal, the founder, and CEO of Blinkit explained how it relates to Zomato's operations by pointing out that, like food delivery, Blinkit is a hyperlocal company that meets consumer demand for prompt product delivery.
The fall in share prices suggests that investors are not as confident about the purchase adding value to the business, even though various stock research firms and their experts claimed that the deal would increase Zomato's business in the long run.
Analysts claim that Zomato's decision to add another loss-making company to its portfolio has damaged investor confidence. The investors have become more apprehensive due to the potential for a bigger cash burn.
The stock has already been lowered by Kotak Institutional Equities Research to "add" from "buy," and the fair value estimate has been reduced from INR 83 to INR 77. The research company continued, "We estimate Blinkit will require investments beyond the $400 Mn envisaged by Zomato given increased competitive intensity."