Zomato shares plunge 6%, down for 3rd day. Here are two reasons

Zomato Ltd shares tanked 6 per cent on Tuesday amid fears that the government-provided Open Network Digital Commerce (ONDC) may emerge as a strong competitor to the food delivery services platforms. Besides, concerns over valuations of online food aggregators have emerged after US-based investment firm Invesco slashed peer Swiggy’s valuation to $5.5 billion, according to a recent filing.

To be sure, ONDC charges a 3 per cent commission, significantly lower than up to 25 per cent charged by Zomato and Swiggy. Customers can access ONDC through online store fronts like Paytm , Meesho, Spice Money.

ONDC promotes an open platform for ecommerce retailers, which may help small players expand their business and reduce the dominance of giants in the sector.

At present, the online food delivery sector in India is primarily controlled by Zomato and Swiggy. However, ONDC appears to be providing more economical food delivery deals to consumers.

ONDC also has partnerships with eKart, Dunzo, Delhivery, and others for delivery instead of having in-house partners.

Meanwhile, Invesco cutting valuations for peer also weighed on the stock. Just a month ago, Invesco valued the company at about $8 billion in October. Zomato shares eventually settle the day at Rs 60.94, down 6.09 per cent.  This was the third day of fall for Zomato shares.

ONDC will require an undertaking from each participant that it will comply with the policy in its entirety at the time of onboarding.

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