Zomato ends lower for third session in a row as anchor investors book profit

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Shares of the online food delivery platform Zomato extended losses for third straight session on Wednesday as the one-month lock-in period of the anchor investors ended on August 23. After hitting an intraday low of Rs 122.90 apiece, the scrip ended today’s session at Rs 124.35, 0.64% from its previous close, while the benchmark Sensex ended at 55,944.21, down 14.77 or 0.03%.

The shares of Gurugram-based food delivery firm have tanked as much as 10% in the last two trading sessions.

Around 13.14 crore Zomato shares were traded on NSE & BSE in the previous two trading sessions, compared to the average volume of 3.08 crore shares traded during the last week. Market experts are of the opinion that the higher volume is an indicator of anchor investors booking profits.

“Anchor investors booked profits in Zomato, since it was a fairly large-sized issue that gave handsome returns to them,” Deepak Shenoy of Capitalmind.

Shenoy also added that anchor investors behave pretty much like retail investors in India where some profits are booked and some stay invested.

Apart from Zomato eleven recently listed companies will see their anchor investor lock-in ending over the next 15-20 days. With Chintan Tatva Pharma anchor investors could hit the street tomorrow and book profits on their allotment.

“Profit booking in Chintan Tatva Pharma could happen as it has doubled their money. That apart CFO of the company has also resigned which could also be the reason of investors booking profits as something fundamental has changed,” Shenoy said.

“Lot of anchor investors also get caught in the same IPO madness that retail investors get caught. The only difference is that they don't have any funding issues. They're not leveraged so they can hold for the long term. They don't have a reason to sell because of a loan. But if they don't like the company or something they would sell,” Shenoy added.

Anchor investors

Institutional investors who are offered shares a day before the initial public offering (IPO) opens are called anchor investors. Strong anchor investor interest gives a fillip to the issue as investors across all categories consider anchor allotment before investing.

According to Sebi (Securities and exchange board of India) rule an anchor investor cannot sell their shares for 30 days after the allotment. The logic behind this rule is to stop investors who sell on listing day from using the anchor date to buy shares.