The company’s co-founder and chief technology officer Gunjan Patidar has tendered his resignation. Patidar was one of the first few employees of Zomato and built the core technology systems for the company.
Some market participants see a knee jerk negative impact of the news on the stock on Tuesday. Shares of the company ended 1.5% higher on the National Stock Exchange at Rs 60.25.
“Such developments create extra selling pressure on the stock. If these kinds of exits happen at the top level, it will have a negative impact,” said Kranthi Bathini, equity market strategist at WealthMills Securities.
In the last couple of months, Zomato has seen several top-level exits. Another co-founder Mohit Gupta had resigned after spending four-and-a-half years with the company.
Prior to that, head of new initiatives Rahul Ganjoo, and vice-president and head of intercity legends service Siddharth Jhawar had also put in his papers.
While management reshuffle happens in a normal course of business, Zomato has seen a spate of exits in a very short span. Moreover, this has happened just when stability returned in the stock after the strong September quarter earnings. For the first time, Zomato’s standalone business turned profitable at the operating level in Q2.
Zomato had offered a strong outlook post the Q2 results. The company retained its guidance on breaking even in the food delivery business by September 2023. It also intends to balance growth and profitability, while not compromising on the former.
From a business perspective, Zomato’s food delivery share remains stable. The business strategy to grow sales and improve profitability remains intact, believe some analysts.
But execution of the proposed game plan remains in question when there is major reshuffling at the top management.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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