On the BSE, Zomato stock price slumped 5% to Rs 120.60 apiece in intraday trading on Tuesday, following a 9% drop in the previous session.
Zomato shares were still 6% higher than their 52-week low, reached on July 23, while they had dropped nearly 20% from their all-time high.
On the BSE, Zomato shares slumped 5% to Rs 120.60 apiece in intraday trading on Tuesday, following a 9% drop in the previous session. The stock has been under pressure since the anchor investor lock-in period expired.
According to analysts, the conclusion of the one-month lock-in period for anchor investors, as well as concerns in the US operations, has caused a significant drop in Zomato stock.
“The lock-in period for anchor investors ended on Monday, so some profit booking was seen, and also considering the current sell-off in broader markets, the stock corrected 15% in two days. However, there is no change in fundamentals and long-term investors are advised to maintain their position with a stop loss of Rs 105,” Rahul Sharma, Co-Founder, Equity99, said.
Zomato’s IPO ushered in a new era, as the company soared in value after being listed, thanks to its innovative business strategy and status as the first of its type.
“Although the company is loss-making it is enjoying good valuations considering future prospects,” Sharma added.
Zomato stock price was still 6% higher than their 52-week low, reached on July 23, while they had dropped nearly 20% from their all-time high. According to analysts, Rs 120 is a critical milestone.
“Technically, Zomato shares look weak on the charts and a daily close below 120 could trigger a further correction till Rs 104 in the near term. While 131 will be strong resistance,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express.
So far today, 12 lakh shares have moved hands on the BSE, while 2.78 crore units have swapped hands on the NSE. Zomato shares were trading at Rs 123.95, down 2.40%, around 11 a.m., after recovering from the day’s low.
In recent research, ICICI Securities classified Zomato as a value stock. The domestic brokerage and research business that first covered Zomato claimed that the food-tech behemoth might scale up to 70% from present levels.
Hem Securities’ Astha Jain, the Senior Research Analyst, expects more selling before building a foundation around Rs 110-115.
“Long term investors may continue to hold as we expect that with the company consistently gained market share over the last four years to become the category leader in the food delivery space in India in terms of GOV, going forward, funds deployment towards the customer and user acquisition & retention expanding delivery and technology infrastructure will increase the growth prospects of the company,” Jain added.
