The company in a filing on Tuesday said that the nomination and remuneration committee of its board of directors has approved the allotment of 4,65,51,600 equity shares to employees upon exercise of vested stock options.
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.
Despite an exuberant listing last year, Zomato has 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.
« Back to recommendation stories
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 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 traded on National Stock Exchange (NSE).
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.
Existing core customers will drive the food business, it said. “The industry has turned into a duopoly and core user base would drive margins,” it added. “Quick commerce is an adjacency, but industry winners are still not clear.”
Another global brokerage firm Jefferies remains bullish on the counter as it believes that management has accelerated its journey towards better unit economics. “The company is eyeing a break even in the food delivery business in the near future.”
With the worst of the competition behind, the industry profit pool should rise as the sector is already consolidated unlike some of the other spaces in India, it said.
Jefferies has a buy tag on the counter with a target price of Rs 100, hinting at an upside of 130 per cent, whereas Credit Suisse sees the stock at Rs 90 in the coming days.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)