Zomato stock reacts on CTO resignation; should you buy or sell?

Zomato Ltd shares dropped on Tuesday as the Street sentiment in the online food delivery platform's shares dampened in the wake of the exit of another high-profile employee. Zomato share price fell by Rs 1.45 or 2,40 per cent on the NSE and were trading at Rs 58.85.

Co-founder and Chief Technology Officer (CTO) Gunjan Patidar on Monday resigned, the company informed in its filing to the exchanges. The food-delivery company has seen a series of resignations over the past few months. In November, Mohit Gupta, Siddhart Jhawar and Rahul Ganjoo had relinquished their positions in the company.   

While Gupta was also a Co-founder, Siddhart Jhawar was Vice President of Global Growth Initiatives and Head of Intercity Food Delivery. Ganjoo was Head of New Initiatives. 

In September, Nitin Savara, who was in the capacity of Chief Financial Officer, had put his papers.  

Gupta had resigned two months after the IPO. The stock has corrected almost corrected 65 per cent from its lifetime highs and is trading 21 per cent below its issue price.  

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No Panic Selling says Anil Singhvi

Commenting on this, Zee Business Managing Editor Anil Singhvi said that investors could see this development in two ways – one is that till the time Deepinder Goyal is at the helm, there is not much to worry. He said that there is a view that new investors have made their entry in the company and there is a top down shift in management with new ideas and plans. In this reshuffle, Goyl will work with his new team to take the company forward. This view believes that Goyal will work toward this goal with his new team and till the time he is there in the company, there is no reason to worry.  

A meaningful correction will give opportunities to investors to make fresh buying moves and it will not be the right time to exit the stock.  

Another view is that this reshuffling could take time to show results.  

Singhvi said that investors of this stock must closely follow what Deepinder Goyal is doing. Till the time he is at the top, there will be no fresh problems. At current levels, all the existing issues have already been discounted, he opined.  

He has advised investors not to worry much and not exit in haste. He said that he was not bearish in this stock now as it is currently trading at right valuations unlike when it was brought for public issue.  

He said that high risk investors must buy Zomato, Nykaa or Policy Bazaar in mood of panic and not do panic selling. 

Expert View - Should you buy it?

Expert Avinash Gorakshkar said that the stock is seeing profit booking at higher levels. He said that profitability remains an issue, though its revenues are expected to grow.  

Fundamentally, the stock is still not ripe for making fresh buying and investors should wait for right levels to make entry.  

He advised investments in fintech companies saying that until they have operating cash flows, they run on private equity fundings.  

There are other options for investments, he further said. 

In FY22, the income is 37 per cent less than its peer Swiggy. Though it trimmed its loses by 70 per cent.

Zomato Vs Swiggy

Rs in Cr  Revenue     Loss 

Zomato      3611       1098 

Swiggy       5705       3629 

Intraday Charts

 Source: NSE