Indian e-commerce player Info Edge India Ltd saw its stock dive down over 9 per cent in the past four trading days, post reports of layoffs at its portfolio company Zomato. In one of its largest firing rounds, the online food delivery and restaurant discovery platform, has laid off 540 employees at its Gurugram office - about 10 per cent of the overall strength at its head office in India. In the bargain, Info Edge, which holds a 26.38 per cent stake in Zomato, saw Rs 2,600 crore ($360 million) wiped off its market value. The stock is currently trading at Rs 1891.50 apiece, up 1.45 per cent from its closing price on Thursday.
"This adds to the growing noise about a slowdown affecting revenue of consumer companies," Purvesh Shelatkar, head of institutional brokering at Monarch Networth Capital Ltd, told Bloomberg, adding that the news about layoffs "is an overhang" on the stock now. Investors are clearly seeing the recent layoffs as a sign of spreading slowdown in consumption.
Info Edge, which also owns leading job portal naukri.com apart from real estate platform 99acres, reported a 20 per cent (year-on-year) jump in revenues to Rs 1,100 crore in the year ended March 2019, while its net income climbed 53 per cent to Rs 280 crore.
On the other hand, unlisted Zomato - in which Info Edge has invested over Rs 152 crore on an aggregate basis - saw its revenues spike up over 181 per cent to Rs 1,312 crore compared to FY18. "The total income increased by 188% from ?4,850.94 million in FY 2018 to ?13,970.06 million in FY 2019," Info Edge said in its latest annual report. But the food delivery unicorn continues to be in the red. It reportedly posted a loss of Rs 1,000 crore, up about 10-fold from 2018.
Nonetheless, the startup claims to be on the verge of cracking its maiden profits. Zomato's founder and CEO Deepinder Goyal said earlier this week that the company is set for 10x growth in five years. "Our losses per month have come down by 50 per cent in the last three months. We are still investing heavily in the food delivery business which has grown 6x in the last year, and is now present in more than 500 cities," he added.