Eternal Ltd., the parent company of popular food delivery platform Zomato, saw its shares fall by as much as 1.7% on Thursday following a significant leadership change within its food delivery business. This development comes at a time when the food delivery sector is facing a slowdown and fierce competition for market share. As of 11:15 AM, Eternal’s stock price was at ₹240.68, showing a slight increase of 0.69% from its lowest point earlier in the day.
Leadership Change at Zomato
Rakesh Ranjan, the CEO of Zomato’s food delivery unit, has stepped down after taking up the role in May 2023. However, he will remain with the company in a different role. The move is part of Zomato’s usual leadership restructuring. During this transition, Zomato’s founder, Deepinder Goyal, will temporarily take charge of the food delivery business while the company looks for a permanent replacement. This change follows the recent departure of Rinshul Chandra, the Chief Operating Officer (COO) of Zomato’s food delivery unit, earlier this month.
Market Reaction and Stock Performance
The news of Rakesh Ranjan’s departure led to a 1.7% drop in Eternal’s share price, hitting a low of ₹235 early on Thursday. However, the stock has since recovered slightly and is now trading at ₹240.68. Over the past year, Eternal’s shares have increased by 28.52%, though they have fallen by 14.29% since the start of this year.
Challenges in the Food Delivery Sector
The leadership change at Zomato coincides with a broader slowdown in the food delivery industry, which began around mid-November 2023, according to the outgoing CEO Rakesh Ranjan. Zomato is facing growing competition, with rival Swiggy increasing its market share to 43% in the October–December quarter, up from 42% previously. Despite the festive season, Zomato’s food delivery growth was limited. The company reported a modest 2% sequential rise in Gross Order Value (GOV), reaching ₹9,913 crore. However, year-on-year growth stood at 17%, signaling a slower pace of growth than expected. Analysts are concerned that Zomato’s market share could be at risk as competitors like Swiggy expand their services, particularly with rapid delivery offerings.
Outlook for Zomato
The upcoming months will be crucial for Zomato as Deepinder Goyal steps in to manage the food delivery business and the company searches for a new permanent CEO. Zomato will need to navigate a competitive landscape and a slowdown in the overall food delivery sector while working to maintain its market position. The leadership transition, along with the ongoing market challenges, will be closely watched by both investors and industry observers.
