Zomato shares down 14% in 2 sessions as anchor investors lock-in period ends – THIS brokerage bullish on stock

The food delivery aggregator — Zomato — shares declined almost 14 per cent in the last two sessions, as the one-month lock-in period of anchor investors ended on Monday. The anchor investors are those institutional investors who are offered shares a day before the initial public offer (IPO) opens.

The scrip on Tuesday declined 5 per cent to Rs 120 per share, however, recovered to trade 1.5 per cent lower to Rs 125 per share, as compared to a 0.76 per cent rise in the BSE Sensex as around 03:10 pm today.

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Zomato ahead of its initial public offer between 14-16 July 2021, had mobilised Rs 4,196.51 crore from 186 anchor investors. The IPO size was Rs 9375 crore with a price range of 72-76 per share.

The shares of the startup got listed on July 23, 2021, near 60 per cent higher to Rs 121 per share on the BSE and NSE, above Zee Business Managing Editor Anil Singhvi's expectations.

At least 68 million shares of Zomato were traded on the NSE on Monday, which is 54 per cent higher than the two-week average of 44 million shares. According to analysts, higher than usual trading volumes is an indication of anchor investors booking profit.

According to SEBI norms, the anchor investors cannot sell their shares for 30 days after the allotment, this is done mostly to curb investors to book profit during the listing. 

The domestic brokerage firm ICICI Securities believes the food delivery platform has huge potential and may post around 70 per cent upside from current levels. ICICI Direct so far becomes so far to raise so much expectation from loss-making company’s stock.

On the contrary, HSBC and Dolat Capital has raised concerned with downside estimate of around 19 and 45 per cent in the stock, day’s after its market debut last month.

ICICI Securities has a target price of Rs 220 per share on Zomato, from the current low. It says, target price bets on around 22 million Indians ordering near 4 times/month in FY25E. It expects a robust 46 to 33 per cent revenue CAGR (compound annual growth rate) over the financial years 2021 to 2026 and financial year 2021-2031 given multiple macro and industry tailwinds.