Zomato shares slide after reported block deal by Uber

Uber Technologies reportedly sold 7.8% shares in Zomato for $392 million at Rs 50.44 per share, marking its complete exit from the company.
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Zomato shares slid to Rs 53.30 per share during the mid-day trade on Wednesday, 4.14% lower than its previous close of Rs 55.60 per share after 8.4% equity worth Rs 3,464 crore changed hands in a series of block deals at an average of Rs 53 per share. 

On Tuesday, Zomato’s shares had gained nearly 20% after it reported strong earnings for Q1 FY23 narrowing losses. 

The block deal offer made on Tuesday was of Rs 2,938.6 crore of $337 million of Zomato shares for Rs 48-54 per share. BofA was the sole book runner for the deal.

While the offer did not name the seller, according to a report by Reuters, ride-hailing giant Uber sold its 7.8% stake in Zomato Limited for $392 million at Rs 50.44 per share in a complete exit. Uber Technologies was allotted shares in the foodtech company after the former sold its food delivery business in India, UberEats, to Zomato in 2020.

According to BSE filings, Uber was the second largest shareholder in Zomato after InfoEdge. 

On Monday, Zomato reported losses of Rs 186 crore for Q1, 2023, a 48% decline from the year-ago period. Operating revenue for the quarter grew to Rs 1,414 crore from Rs 844 crore in the year-ago period. During the earnings call, the company said it was looking to achieve EBITDA breakeven at a company level by Q4 of FY 2023 or latest by Q2 of FY 2024. 

In its letter to shareholders, Zomato said it will not make any more minority investments going ahead and is on a cash conservation mode. It is also mulling re-organising multiple business verticals as it forays into quick commerce with the acquisition of Blinkit.

Each vertical will be headed by a separate chief executive officer, who will in turn report to CEO and Co-founder of Zomato, Deepinder Goyal.

Edited by Saheli Sen Gupta