INDIA — It was reported last Thursday (1 Dec 2022) that Singapore’s investment company, Temasek Holdings through its wholly-owned subsidiary Camas Investments bought more shares in Zomato on Wednesday (30 Nov 2022).
On the same day, Alipay which belongs to the Chinese e-commerce giant Alibaba sold its stake amounting to 3.07% of the company for Rs1,631 crore (US$200.3 million) in the open market.
Camas Investments is said to have acquired 9.80 crore shares (constituting about 1.14% stake) of the company at an average price of Rs62, taking the transaction value to over Rs607 crore (US$75 million).
After the transaction, Temasek’s stake will increase to 4% in the company.
The development comes months after Uber Technologies sold its 7.8% stake in Zomato for US$392 million via a block trade in August this year.
Zomato is an Indian-based online restaurant aggregator and food delivery company. It went public in July last year.
Currently, the company is still losing money. Zomato reported a net loss of Rs250.8 crore (US$30.8 million) for the quarter that ended September 2022.
However, its gross order value or the total value of all food delivery orders placed online on Zomato’s platform was said to have jumped nearly 23%.
Since going public on 23 July last year, the share price of Zomato has been trending downwards and is down over 47%. The share prices had a boost in value after Temasek’s reported buy-in on 30 November.
Top Executives Leave Zomato
Last month (22 Nov), the Economic Times of India reported that there has been a spate of top-level exits from Zomato in a span of three weeks.
What was most worrying is that its co-founder Mohit Gupta has resigned. Other resignations include the head of new initiatives Rahul Ganjoo, and vice president and head of intercity legends service Siddharth Jhawar. To cut costs, Zomato plans to lay off nearly 3% of its staff.
The company said it will achieve breakeven by September next year.
For Jefferies India, Zomato is a ‘high-conviction’ buy with a price target of Rs100.
“Current valuations are undemanding in the context of profitable growth. Zomato remains a buy with high conviction,” Jefferies said in a report last month.
Despite the optimistic recommendations from some of the broking firms, Alibaba still went ahead to sell its shares in Zomato last week.
Obviously, Jack Ma and his team didn’t believe that Zomato’s share price would hit Rs100. Meanwhile, Temasek is trying to support the share price of Zomato.
