On Wednesday, Food delivery company Zomato made a series of block trades with about 707.4 million shares, or 9% of the company, changing hands, according to Bloomberg.

Shares of Zomato opened sharply lower after CNBC-TV18 said the promoters of India’s largest food delivery aggregator would sell a 7.8% stake in the company later in the day.

The stock opened more than 9.6% lower after more than 32 trades changed hands. However, the stock erased all losses and rose to a high of Rs 55.95 from its previous close of Rs 55.60 per share. Shares of BSE were at Rs 54.25 at 9.40 am, down 2.4% from their last close.

The offer was around Rs 2,938 crore or $373 million, with a price range of Rs 48-54 per share. The issuance size is equivalent to 612 million shares, accounting for 7.8% of the total.

Bank of America Securities will be the sole bookrunner for the transaction.

Zomato closed at Rs 56 on the BSE on Tuesday, up 20% after the company reported that its net loss narrowed 48% to Rs 186 crore in the June quarter. The company also said its food delivery division broke even during the period. Management said it targets breakeven adjusted EBITDA in the fourth quarter of fiscal 2023. However, if the company fails to achieve this, it will do so by the second quarter of fiscal 2024.

Zomato shares are trading at 0.9x 1Y forward EV/GMV and 3.5x EV/Revenue after a sharp year-to-date correction. While this is a premium to global and regional peers, it is reasonable in the context of long-term growth and a clear medium-term forecast for higher GMV, analysts said.

“By our estimates, Zomato continues to widen its market share gap. Zomato remains a disruptor in the space and continues to expand its restaurant ecosystem approach. The increase in contribution margin reflects the ability to control costs when revenue leverage is in place. We will continue to watch closely for the continuation of these trends and believe the strong trends demonstrated this quarter will come under pressure,” said B&K Securities.