Zomato stages smart rebound; stock zooms 10% post deep slump

Shares of Zomato Limited staged a smart recovery on Tuesday and zoomed 10 per cent to hit an intraday high of Rs 100.2 on BSE. On Monday, the stock crashed 19 per cent to hit an intraday low of Rs 92.25 on BSE amid a global sell-off.

It touched an all-time low of Rs 84.10 on BSE today but recovered in early trade. At 13:13 hours, the shares were trading 6.89 per cent higher at Rs 97.70. The market cap of the company rose to Rs 76,903.48 crore on BSE.
 
After the deep slump on Monday, Zomato CEO Deepinder Goyal said in a letter to his employees that the company does not have much to worry about except execution and that he is confident about Zomato’s overall strategy as a business.
 
“I am confident about our overall strategy as a business. Let’s continue executing… creating value, cutting costs, and like always, not look at the stock price. We are adequately capitalised and don’t have much to worry about except execution,” Goyal said in his email to his employees.
  
He noted that this could be due to the global sell-off in growth tech stocks which impacted stocks like Doordarshan, Peleton, Delivery Hero, Netflix and Zoom. Goyal also said that Zomato as a company had no control in its valuation going up from $8 billion in the IPO to $17 billion at its peak and vice versa.
 
The stock hit a 52-week high of Rs 169.10 on November 16, 2021. The shares of India’s first food unicorn startup are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

According to Abhay Agarwal, Founder, Piper Serica, the sharp correction witnessed in the recently listed Internet and tech stocks like Zomato are driven primarily by more than 10 per cent correction in Nasdaq over the last month. With an increase in interest rates, tech investors seem to be taking money off the table for the time being.

"With all technical indicators flashing red we do not see any sharp rebound in tech stocks. At the same time, it is a good opportunity for long-term investors to add stocks like Zomato to the portfolio since it is a leader in a fast-growing industry that has only one other player. Also, since the company is well funded and has profitable unit-level metrics, we are not worried about the correction in valuation," he added.
 
Zomato made a bumper debut on bourses with the unicorn hitting the Rs 1-lakh crore market capitalisation mark. The stock opened at Rs 116, 52.63 per cent higher on NSE against the issue price of Rs 76. The listing price on the Bombay Stock Exchange was at Rs 115, up 51.32 per cent.