Zomato, the online food delivery service experiencing its worst period on Dalal Street, has distributed roughly 4.66 crore shares from its employee stock option plan (ESOP) pool to its staff, each with a face value of Rs 1.
According to its statement with the stock exchanges, the board of directors approved the allocation of 4,65,51,600 equity shares to employees upon the exercise of vested stock options. The total value of the allocation is approximately Rs 200 crore (on Wednesday, the share price of Zomaro was around Rs 43).
The board of directors of the company's nomination and remuneration committee approved the allocation of 4,65,51,600 equity shares with a face value of Re 1 each, as fully paid-up, to specific employees of the company and its subsidiaries upon exercise of vested options at its meeting on July 25, 2022, the company said in its note.
The total number of shares distributed to the workforce by the food delivery platform is 792.02 crore shares. Zomato distributed 63.5 lakh ESOPs under a 2018 plan, and 4.02 crore shares to its staff in 2021. The stock allocation occurred as Zomato's share price plummeted by over 11% on Monday and by more than 7% on Tuesday to reach an all-time low of Rs 43.05, wiping away more than Rs 89,000 crore.
According to international brokerage and research firm Jefferies, the stock may present a favourable entry opportunity for long-term investors, thus now is the time to buy. According to a letter from Jefferies, long-term investors should buy Zomato stock with a target price of Rs 100 right away. The memo stated that Zomato management had accelerated its progress towards better unit economics and was now aiming for break-even in the food delivery industry in the near future.
This year, the stock of the industry leader in online food delivery has decreased by more than 69%. The one-year lock-in period for investors deemed insiders have ended come to an end, and Zomato shares have dropped to their lowest levels since the IPO was announced at Rs. 76 per share.