INDIA - Zomato (NS: ZOMT )'s market valuation soared past INR 1 Lakh Cr on Wednesday, as shares on the Bombay Stock Exchange (BSE) climbed over 4% to hit INR 119. This followed the news that Alipay Singapore Holding of Ant Group is considering selling its entire 3.44% stake in the online food delivery company. The shares opened at an increased value of INR 116.15, up from Tuesday's close of INR 113.80 on the National Stock Exchange (NSE).
The potential sale by Alipay Singapore Holdings, aiming to divest shares at INR 111.28 each for proceeds of around INR 3,290 crore, marks another instance of significant investors reducing their stakes in Zomato. Previously, foreign institutional investors have lessened their holdings following the expiration of their lock-in period post-IPO. Notably, Japanese tech investor SoftBank (TYO: 9984 ) sold a substantial portion of its stake, accumulating more than INR 1,970 Cr across transactions, and investment firm Tiger Global fully exited by selling a stake of about 1.44%.
Despite the broader market volatility that once drove Zomato's share price down from its all-time high of INR 169.10 to a low of INR 40.55, the company's stock has rebounded, registering an impressive ninety-two percent surge since the beginning of the year. This rally has been bolstered by Zomato's financial performance, with the company reporting an eighteen-fold increase in profit after tax to INR 36 Cr in the second quarter of FY24, a significant leap from INR 2 Cr in the same quarter of the previous year.
The company's financial growth comes amidst challenges, including Goods and Services Tax (GST) notices served to both Zomato and its competitor Swiggy, demanding roughly INR 1,000 Cr concerning delivery fee collections. Despite these regulatory hurdles, the market's response to Zomato's recent financial achievements and the news of Alipay's planned stake sale reflects investor confidence in the company's growth trajectory.
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