Zomato share price up 4% after Uber sells, institutional investors buy stake in bulk deals; still down 60% YTD

Zomato share price settled 4.24 per cent up at Rs 57.75 apiece on BSE on Thursday

Zomato stock, Zomato share price
Zomato stock has soared 42 per cent in the last seven trading sessions, after hitting an all-time low of Rs 40.55 apiece on 27 July. Image: Reuters

Zomato share price gained more than 4 per cent intraday BSE on Thursday, after institutional investors lapped up stakes in the food delivery firm and Uber sold through bulk deals on BSE. The stock settled 4.24 per cent up at Rs 57.75 apiece on BSE. Zomato stock has soared 42 per cent in the last seven trading sessions, after hitting an all-time low of Rs 40.55 apiece on 27 July. Uber Technologies sold its entire stake of 7.8 per cent in the Indian food delivery firm. Around 20 global and Indian funds bought stakes in Zomato, Reuters reported citing unidentified sources.

Fidelity Investment Trust’s Fidelity Series Emerging Markets Fund bought 5.44 crore shares of Zomato through a bulk deal at an average price of Rs 50.26. ICICI Prudential Life Insurance Company lapped up 4.5 crore shares of the food delivery firm at Rs 50.25 per share. On the other hand, Uber Technologies offloaded 61.22 crore shares of Zomato at an average price of Rs 50.44 per share.

On Thursday, Zomato said investment firm Tiger Global has cut its stake by almost half to 2.77 per cent by selling over 18.45 crore shares in the open market. Tiger Global’s Internet Fund VI Pte Ltd had a holding of 5.11 per cent in the online food delivery platform before the sale. Between July 25- August 2, 2022, the fund sold over 18.45 crore shares aggregating to 2.34 per cent stake in the company in the open market, Zomato said in a BSE filing. Post the sale, Internet Fund VI Pte Ltd has 2.77 per cent stake in Zomato.

Also read: Zomato targets Ebitda break-even by 2023

In the last five days, Zomato share price gained 22 per cent, and 5 per cent in the last one month. On a year-to-date (YTD) basis, stock price has tanked 60 per cent, and 40 per cent in the last six months. While it has plunged 59 per cent in the last one year. In the April-June quarter of the fiscal, Zomato’s net loss halved. The food tech player posted a consolidated loss at Rs 186 crore for the quarter ended 30 June 2022, as compared to a loss of Rs 361 crore in Q1FY22. Revenues during the quarter jumped 68 per cent on-year to Rs 1,414 crore.

Also read: Zomato share price rallies 13%, tops Rs 50 as Q1 net loss halves; should you buy, sell or hold?

Analysts at Edelweiss Research, in a note, said that Zomato’s impressive performance and reduced cash burn inspires confidence in its execution capabilities. “We will, however, watch out for the Blinkit integration,” they said. The stock is trading at 4.9x FY24E P/S. Edelweiss Research remains bullish and recommended to buy the stock with a DCF based target price of Rs 80, implying a potential upside of 46 per cent from today’s low. Given the sharp improvement in profitability, Edelweiss Research cut EBITDA loss estimates and factored in adjusted EBITDA breakeven by Q1FY25.

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