Zomato's stock fell for the second day in a row on Tuesday, after plummeting over 9% in the previous day as the obligatory 30-day lock-in period for anchor investors expired. In Tuesday's opening trades on the BSE, shares of the online meal delivery platform fell over 3% to 123 per share, marking a drop of over 13% in the last two days.
Zomato's first public offering (IPO) received Rs 2.1 trillion in bids and was 40 times oversubscribed. The IPO was viewed as a test case for other tech start-ups planning to go public in the near future.
Why did Zomato Shares plunge?
The share price of newly-listed Zomato has dropped over 13% in a previous couple of trading sessions, wiping off almost Rs 15,000 crore from its market capitalization. A bigger volume with which the price is declining is also visible. On Monday (August 23, 2021), almost 6.8 crore Zomato shares were traded on the NSE, up 54% from the two-week average of 4.4 crore shares.
The 30-day lock-in period for anchor investors concluded on Monday (August 23), and Zomato's shares plunged 9% on the Bombay Stock Exchange (BSE). The company's stock opened at INR 138.10, dropped to an intraday low of INR 124.9, and closed at INR 127 when trading ended for the day.
According to SEBI regulations, an anchor investor is a qualified institutional buyer who submits an application for a public issuance worth at least INR 10 crore. They are unable to exchange their shares until 30 days following the initial public offering, in order to protect regular retail investors.
Anchor investors booking profits is one of the causes for the higher-than-usual trading volume and share price drop. An allotment of 30% of the IPO size was given to anchor investors. They have a 30-day lock-in period. This implies they won't be able to sell their shares until 30 days after the allotted period ends on August 23.
Zomato's IPO was worth roughly Rs 10,000 crore, with 30% reserved for anchor investors who made a spectacular profit of around 70% in a month, therefore taking a profit was completely acceptable.
On a standalone basis, the company's revenue from operations increased by 28 percent from INR 591.9 Cr in the March quarter to Rs 757.9 Cr in the June quarter, after its public offering on July 23. Meanwhile, the company's financials recently indicated that adjusted sales jumped by 26% quarter-over-quarter to Rs 1,160 Cr, while adjusted EBITDA loss increased by 42.66 percent from INR 120 Cr to Rs 170 Cr in the same period.