Zomato Shares Worth ₹1,125 Crore Sold, SoftBank Likely Seller

On December 8, Zomato went through a block deal, where shares worth ₹1,125 crore changed ownership. The deal occurred at ₹120.5 per share, at a discount of 1% from yesterday’s close of ₹123.3. While the specific buyers and sellers remain undisclosed, reports hint at SoftBank's potential move to trim its stake in the Gurugram-based food delivery platform.

SoftBank, an investor in Zomato, has consistently decreased its stake throughout the year. By September, its affiliate's holding was reduced to 2.17% from 3.35% in June. This recent block deal follows a series of strategic sell-offs, including a 1.09% equity stake in October for ₹1,040.5 crore.

In addition to Zomato, SoftBank has been actively divesting from various ventures. In November, it sold around 1.8 crore shares in Delhivery, and in October, sold a 2.5% stake in PB Fintech. This aligns with SoftBank's broader strategy of reshaping its investment portfolio in the Indian market.

Market Performance and Investor Sentiment

Despite a 102% surge in its share price this year, Zomato is still trading below its all-time high of ₹169. SoftBank's decision to offload its stake aligns with its recent trend of divesting from Indian tech companies, including Paytm. Analysts continue to show confidence in Zomato, with Citi maintaining a 'Buy' call and setting a target price of ₹145 per share. UBS has also increased its target price to ₹150, citing improvements in food delivery and overall margins.

Zomato's shares, having corrected by approximately 7% post-World Cup, face potential headwinds due to reports on GST non-payment. However, analysts anticipate a rebound, with four out of 29 analysts predicting the stock to surpass its previous record high of ₹160 within a year. Investor sentiment remains positive, with 25 analysts giving a 'Buy' rating and four a 'Sell' rating.

Financial Performance

In the July-September quarter, Zomato reported a net profit of ₹36 crore, marking its second consecutive profitable quarter. The company's revenue surged by 71%, reaching ₹2,848 crore. Zomato's commitment to robust earnings has not only attracted new investors but also provided existing ones an opportunity to exit at a profit

Final Words

Zomato's recent block deal and SoftBank's ongoing stake reduction highlight changes in the Indian tech investment landscape. Despite short-term challenges, the company's financial performance and positive outlook from analysts position it for potential growth. As Zomato continues to evolve, market watchers remain keenly observant of its strategic moves and investor sentiment.