After the mandatory lock-in period expired, Zomato shares continued to decline

After the one-year required lock-in period for promoters, stockholders, and others came to an end, shares of the new-age food aggregator and delivery business Zomato continued to decline for a second day.

The period during which investments cannot be sold or redeemed is referred to as the lock-in period.

Shares of the meal delivery company were down 7.14% at 44.20 at 11.48 a.m. It decreased by more than 10% on Monday.

The food aggregator’s first public offering, which was listed on July 23, 2021, was a success because it was oversubscribed 38.25 times. It made an outstanding debut at a premium of 53%. Zomato’s share price is currently down about 70% from its peak of 169, though.

Even though the company achieved large gains on its stock exchange listings in July of last year, it was unable to further capitalise on it.

“Recently Zomato also acquired Blinkit (formerly known as Grofers) for INR 4,447 crore which acted as a catalyst in Zomato’s downward movement as Blinkit is a loss-making start-up. Blinkit losses around INR 84 per order and their annual cash burn is around $165 million,” said Mohit Nigam, Head – PMS, Hem Securities.

“Given the choice, all big investors, FIIs and DIIs would prefer to invest in leading tech stocks of the world rather than making a risky bet in new age startups. Another reason for investors to be cautious is that the recent ongoing events globally has changed investors’ mindset to invest in new age growth stocks to traditional defensive stock,” Nigam added.

The Board of Directors of Zomato has authorised a plan to pay 4,447 crores for the struggling fast commerce business Blinkit. Grofers was the previous name for Blinkit. It anticipates that the acquisition will lower delivery costs and enhance the use of Zomato’s hyperlocal delivery fleet.

Similar to Zomato, a number of other companies had big increases on their exchange debuts over the last year, but they later underperformed and fell sharply from their all-time highs.

Analysts contend that these businesses lacked organised focus and direction, while others blamed the downturn on an exorbitant valuation.