Shillong, August 18: Market speculation surrounding potential exits by pre-IPO shareholders (VC/PE/Chinese investors) and former Blinkit shareholders who received shares through a share swap deal could lead to significant volatility in Zomato’s stock in the near term, according to a report by JM Financial Institutional Securities.
As per IANS, the report highlighted that while the exact timing of these potential exits is uncertain, several shareholders have already seen substantial gains, even though a significant portion of these gains remains unrealized. The report suggested that recent stock price gains might motivate some of these shareholders to capitalize on profits.
This situation could result in a considerable number of Zomato’s shares being available for trading in the near future. The collective value of Zomato’s stock held by these investors is approximately Rs 180 billion. Even if only 50% of the VC/PE/Chinese investor stake becomes available for trading, the potential short-term outflows could approach Zomato’s total IPO size of Rs 93.75 billion.
The report encouraged long-term investors to consider leveraging these liquidity events to establish a substantial position in Zomato. The company not only offers exposure to India’s online food services market but has also expanded into a diversified presence in online retail through the Blinkit acquisition.
Shares owned by former Blinkit investors are expected to become tradable starting from August 28. Zomato had issued new equity shares to Blinkit’s selling shareholders as part of the M&A deal, with a 12-month lock-in period for these shares. The report noted that the majority of these shares are held by notable venture capital investors like Softbank, Tiger Global, and Sequoia.
While various shareholders stand to benefit from unrealized gains, the report cautioned that the potential for significant stock availability based on past actions of these investors could influence Zomato’s stock dynamics in the near future.
