That’s great news for Zomato! The company’s performance in the first quarter of the financial year showed a significant improvement with a profit after tax of Rs 2 crore. This is a positive change compared to the net losses reported in the previous quarters.
The stock has also shown impressive growth, hitting a 52-week high of Rs 102.85 on August 7, 2023. It’s worth noting that the stock had previously hit a low of Rs 44.35 on January 25, 2023. Since then, it has recovered over 106% from its lows, indicating a strong rebound.
According to JM Financial, Zomato’s stock is expected to be volatile in the near term due to market speculation surrounding possible exits by some pre-IPO shareholders, such as venture capitalists, private equity firms, and Chinese investors. Additionally, erstwhile shareholders of Blinkit who received shares through a swap deal may also contribute to this volatility.
While it is difficult to accurately predict when these shareholders may choose to exit, it is worth noting that many of them have already achieved significant gains, although a large portion of these gains remains unrealized. Based on past actions, some of these investors may be eager to book profits following the recent surge in the stock’s value.
This means that a significant amount of Zomato’s shares owned by venture capitalists, private equity firms, and Chinese investors could be available for trading soon. The combined value of these shares is estimated to be Rs 18,000 crore.
Even if only 50% of their stake is available for trade, the potential outflows could be close to the total size of Zomato’s initial public offering (IPO), which is Rs 9,375 crore. This suggests that there could be a substantial impact on the stock’s liquidity and overall market dynamics.
