Zomato falls over 8% as lock-in period for anchor investors ends

Mumbai: The end of the 30-day lock-in period for anchor investors in Zomato’s initial public offering on Monday sent the stock tumbling by as much as 10%. With the restrictions on sale of shares that these institutions got in the issue over, they are now free to sell their holdings in the open market.

Shares of the online food delivery platform operator ended 8.8% lower at Rs 127 on BSE, its biggest single-day decline since listing a month ago. Till August 20, Zomato had rallied nearly 83% from its offer price of Rs 76 a piece.

The company had raised Rs 4,197 crore from 186 anchor investors ahead of the IPO opening on July 14 by allotting 552.2 million shares at Rs 76 apiece. Sebi rules say anchor investors — institutions which are offered a portion of qualified institutional buyers’ segment shares a day prior to the opening of the IPO — can sell their shares only 30 days after the listing. The company made its debut on July 23.


Analysts said some of them would have cut their holdings on Monday as the sale restrictions were lifted.

“Whether it’s retail or high net worth individuals or institutions, all want to make quick money,” said Ambareesh Baliga, an independent analyst. “It was expected that anchor investors in Zomato will hold on for the longer-term, but some must have sold due to various other factors like the overall market conditions, liquidity issues among others.”

Zomato’s stock got listed at Rs 116 per share, a 53% premium over its final offer price of Rs 76. Post listing, domestic mutual funds held 3% stake in the company while foreign portfolio investors owned 7.69%.

Out of the six analysts tracking the stock, four have a ‘buy’ rating while HSBC and Dolat Capital have ‘sell’ ratings. According to the Bloomberg consensus estimates, the stock can give 24% returns from its current levels.