Zomato Stock Drops 2% Amid Heavy Trading; Antfin Speculated as Seller

On Tuesday, shares of Zomato Ltd experienced a significant drop of approximately 1%, following a substantial turnover on the stock exchange. This decline has been largely attributed to China's Antfin Singapore Holdings, which is speculated to have sold a 1.54% stake in the food delivery giant via block deals. Zomato's stock dipped by 1.98%, reaching a low of Rs 257.10 on the BSE (Bombay Stock Exchange). The trading volumes for Zomato soared to 19.86 crore shares, which is an astonishing 44.5 times higher than the two-week average trading volume. This intense activity led to a total turnover of Rs 5,115.21 crore.

Antfin Singapore Holdings' Block Deal

Reports indicate that Antfin Singapore Holdings, a significant public investor, was looking to offload its shares at a floor price of Rs 251.68 per share. This potential sale was valued at a massive Rs 3,420 crore, or approximately $408 million. The deal has garnered significant attention, as block deals of this magnitude are rare and often lead to fluctuations in stock prices. Additionally, a report from Source highlighted that large transactions involving Zomato shares occurred at Rs 258 per share during the trading session.

Global Investment Banks Involved

The share sale by Antfin Singapore Holdings was reportedly managed by two global investment banking giants, Goldman Sachs and Morgan Stanley. These banks are often involved in high-stakes transactions due to their extensive expertise in managing large-scale deals. Although the details of the sale have not been independently verified by Business Today, the involvement of such reputable institutions adds weight to the reports.

Antfin’s Stake in Zomato: A Historical Perspective

As of the end of the June 2024 quarter, Antfin Singapore Holdings owned 37,38,55,225 shares, representing a 4.30% stake in Zomato. This recent sale is not the first instance of Antfin reducing its stake in the company. Earlier this year, in March, Antfin had sold a 2.1% stake in Zomato through block deals at around Rs 160 per share, generating approximately $341.50 million. Prior to this, Antfin held a 6.42% stake in Zomato at the end of December 2023. These consistent sales indicate a strategic exit by Antfin from its investment in Zomato.

Alipay’s Exit from Zomato

It’s noteworthy that Antfin’s actions follow a similar move by another Chinese entity, Alipay. In November 2023, Alipay completely exited Zomato, selling off its entire 3.44% stake in the company. This exit marked the end of Alipay's investment in the Indian food delivery platform, reflecting a broader trend of Chinese investors divesting from Zomato.

Zomato's Stock Performance in 2024

Despite the recent drop, Zomato’s shares have shown impressive performance throughout 2024. The stock has surged by 109% since the beginning of the year, and an astounding 190% over the past one year. This remarkable growth has attracted the attention of investors, making Zomato one of the standout performers in the Indian stock market.

Foreign Brokerage Ratings: A Bullish Outlook

The strong performance of Zomato's stock has not gone unnoticed by foreign brokerage firms. UBS, a prominent foreign brokerage, has maintained its 'Buy' rating on Zomato, significantly raising its target price from Rs 260 to Rs 320. This optimistic outlook is based on the company's strong market position, growth prospects, and successful business strategy. Similarly, last week, Morgan Stanley reiterated its 'Overweight' rating on Zomato, with a target price of Rs 278, underscoring its confidence in the company’s future performance.

Conclusion: The Road Ahead for Zomato

The recent sell-off by Antfin Singapore Holdings and the prior exit by Alipay represent notable developments in Zomato's ownership structure. However, despite these changes, Zomato continues to demonstrate strong stock market performance, driven by its robust business model and investor confidence. The company’s shares, which recently hit a record high of Rs 280, remain a focal point for investors. As global investment banks like Goldman Sachs and Morgan Stanley manage these large transactions, Zomato’s stock is likely to remain in the spotlight. With foreign brokerage firms maintaining bullish outlooks and increasing target prices, the road ahead for Zomato looks promising, albeit with the usual market fluctuations.