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.