Info Edge can’t sell Rs 25,000-cr holdings in Zomato, PB Fintech for a year

A source close to Info Edge said that an open letter addressed to its chairman Sanjeev Bikhchandani on Tuesday asking him to de-risk the technology holding company from Zomato was “academic and pre-mature.”

This is because, until recently, Sebi regulations mandated that pre-IPO investors in a company cannot offload shares after its listing for a period of one year. The market regulator reduced this time horizon of lock-in to six months in August this year.

Info Edge declined to comment on the matter.

The source added, “It does not apply to Info Edge’s Zomato and Policybazaar holdings as both their DRHPs were filed before August 13th when the revised rules kicked in. However, seeing how the Zomato stock has doubled in value from the IPO, there is no reason to sell. ”

Info Edge’s 15.23 per cent stake in food delivery firm Zomato is worth over Rs 18,000 crore and 13.3 per cent stake in Policybazaar parent company PB fintech is valued at over Rs 7,000 crore, according to market capitalisations of the two tech start-ups.

Zomato shares listed on the BSE in July at Rs 116 — rising 53 per cent over the final offer price of Rs 76. The foodtech major’s shares were trading at Rs 160.75 at the time of publishing this article.

Shares of PB Fintech, the parent company of Policybazaar, rallied 16 per cent to Rs 1,397 on the National Stock Exchange (NSE) in Tuesday’s intra-day trade after a strong market debut on Monday.

The letter, published in a financial daily on Monday, said that the foodtech firm is facing issues on multiple fronts like delivery partners and restaurants. It added that the markets may start factoring in growth constraints and low EBITDAs with respect to Zomato over the next few years. It also suggested that Info Edge should invest in newer ventures.

Info Edge saw its net profit rise 2,147 per cent to Rs 7,371 crore year-on-year (YoY) in the September quarter. It reported an unrealised market gain of Rs 8,941 crore from its stake in foodtech company Zomato in the second quarter. The company registered a gain of Rs 357 crore from the sale of its shares in the Zomato initial public offering.

The company reported profit before tax (before exceptional items) of Rs 139.2 crore for the quarter ended September, compared to Rs 65.4 crore in the year-ago period.

Info Edge shares were up 3 per cent above opening price at Rs 6,538 at the time of publishing.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor