Zomato Share fall as food delivery giant faces competition and regulatory hurdles

Zomato Share – Zomato Ltd, one of India’s leading online food delivery platforms, saw its share price decline by 1.55% on Monday, closing at Rs 114.70 on the National Stock Exchange (NSE). The company, which went public in July this year, has been facing stiff competition from rivals such as Swiggy, Amazon Food, and Dunzo, as well as regulatory challenges from various states over its business model and practices.

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Zomato, which operates in over 500 cities across India, reported a net profit of Rs 360 crore for the quarter ended September 30, 2023, compared to a net loss of Rs 101 crore in the same period last year. However, the company’s revenue growth slowed down to 71.43% year-on-year, from 94.25% in the previous quarter. Zomato attributed the slowdown to the impact of the second wave of the COVID-19 pandemic, which affected the demand and supply of food delivery services.

Zomato also faced regulatory headwinds in several states, such as Maharashtra, Karnataka, Tamil Nadu, and Gujarat, where it was accused of violating labor laws, consumer protection norms, and tax regulations. The company faced protests from its delivery partners over issues such as low wages, incentives, and working conditions. Zomato also faced backlash from some restaurant owners and associations, who alleged that the company was charging high commissions, imposing unfair terms, and engaging in predatory pricing.

Zomato’s share price has fallen by over 9% since its listing on July 23, 2023, when it debuted at Rs 126.35 per share. The company, which has a market capitalization of Rs 98,651 crore, is trading at a price-to-book ratio of 5.15, which is higher than the sector average of 3.39. Analysts have mixed views on the company’s prospects, with some recommending a buy, while others suggesting a hold or sell.

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