Online food aggregator, Zomato has allotted Rs 4.65 crore equity shares from its ESOP (employee stock option plan) pool at an exercise price of one rupee. In a letter to the stock exchanges, the listed startup wrote, “With reference to [the] subject, we wish to inform you that the nomination and remuneration committee of the board of directors of the company at its meeting held on July 25, 2022, has approved the allotment of 4,65,51,600 equity shares having a face value of Rs 1 each, as fully paid-up, to identified employees of the company and its subsidiaries upon exercise of vested options.”
Under the 2018 plan, Zomato allotted Rs 63.5 lakh worth of ESOPs while under the 2021 scheme, it gave Rs 4.02 crore worth of shares. This way, the company’s total share allotment now stands at Rs 792.02 crore, up from Rs 787.36 crore.
The shares of Zomato, which recently completed one year on Dalal street, have been reeling under severe selling pressure, with the counter losing about one-fourth of its value in a week.
Even at its lifetime lows of Rs 40.55, the entire allotment is worth Rs 188.75 crore, which was given at the face value of Re 1 each, accounting for close to Rs 4.66 crore. It is about a 98 per cent discount from the latest stock lows.
The current fall has been attributed to the intense sell-off post the expiration of the one-year lock-in period for Zomato’s promoters, company employees, founders, and others. Zomato’s Blinkit acquisition has also added to investors’ woes.
While Zomato had an impressive stock market debut, it underperformed peers on a year-to-date basis. It, in fact, is the worst performing internet stock as it is down by 70 per cent on a year-to-date basis and has fallen three-fourths from its record highs.
On July 23, Saturday, around 613 crore shares or a 78 per cent stake of Zomato was out of mandatory lock-in after a year of IPO allotment, which induced the latest round of selling pressure on the counter.
The foodtech giant is also working with India’s antitrust watchdog Competition Commission of India (CCI) to assist with an investigation into the conduct of the foodtech platform and its rival Swiggy.
Global brokerage Credit Suisse has maintained its ‘outperform’ rating on Zomato as it believes that the company is on a clear road to profitability growth.
Despite the tumble, US-based investment bank Jefferies has maintained its ‘buy’ rating on Zomato, with a price target of Rs 100 (an upside scenario of Rs 160 and the downside scenario of Rs 40).
On Wednesday, Zomato’s share price hit a fresh low of Rs 40.60 apiece, giving more jitters to retail investors. However, it recovered some of the losses during the past two sessions. The shares rose over 5 per cent to trade at Rs 43.85.
The volumes for Zomato have remained elevated on the exchanges as more than 145 million shares of the company exchanged hands on BSE as of 10.30 am. On the other hand, close to 220 million shares of the new-age internet company are traded on the National Stock Exchange (NSE).
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