Zomato Shares: Shares of food delivery firm Zomato rallied 4 per cent to Rs 68.60 on the BSE, thus gaining 5.5 per cent in the last two trading days. This comes after the company said its board will meet on Friday, June 24, to consider a proposed acquisition. “The meeting of the board of directors of the company is scheduled on June 24 to consider a potential acquisition transaction by the company, the consideration for the same may be discharged through the issuance of equity shares on a preferential basis,” Zomato said in an exchange filing on Tuesday after market hours.
According to an Economic Times report, Zomato has held discussions to acquire Blinkit, formerly Grofers, in a share-swap deal, multiple people briefed on the matter said. This comes on the back of Zomato investing $100 million in the Gurgaon-based quick-commerce startup last year, picking up an about 10 per cent stake.
The merger has been speculated as an eventual outcome ever since the time Zomato invested in Blinkit. While the contours of the deal are being finalised, it is expected that shareholders of Zomato would get 10 Blinkit shares for each held in their company, the people said. That would value Blinkit at around $700-800 million, based on Zomato’s current market capitalisation. This is lower than Blinkit’s previous valuation of a little over $1 billion.
During the Zomato Q4 result media interaction, last month, questions were also asked on media reports of a potential M&A between Zomato and Blinkit. To this, Chief Executive Officer (CEO) Deepinder Goyal replied that the company continues to remain bullish on the quick commerce sector and that Blinkit has grown well in the past six months.
He said, “We continue to remain bullish on quick commerce, especially given how synergic it is to our core food delivery business, and are excited with the progress that Blinkit has made in this space. While there is a lot to do as the business is at its early stages, there’s still a lot of low-hanging fruit to drive growth and efficiency. ”
Goyal added, “Blinkit has grown well in the past six months, and has also significantly reduced its operating losses. We have committed to give them a short-term loan of up to $150 million to fund their short-term capital needs. Beyond that, there is nothing to share at this moment.”
Zomato Share Price History
In the past one month, Zomato has outperformed the market by gaining as much as 18 per cent, as compared to a 4 per cent decline in the S&P BSE Sensex. The stock had hit a 52-week low of Rs 50.35 on May 11, 2022.
However, in the past six months, the stock price of Zomato more-than-halved or tanked 51 per cent, as against a 8 per cent fall in the Sensex. It has corrected 59 per cent from its record high of Rs 169 touched on November 16, 2021. In July last year, Zomato had raised Rs 9,375 crore through initial public offer (IPO) by issuing shares at price of Rs 76 per share.
Last month, Zomato reported a net loss of Rs 359 crore in the fourth quarter of fiscal year 2021-22. The company’s revenue, during the same period, climbed to Rs 1,211.8 crore. The net loss has nearly tripled as compared to the year-ago period, when it stood at Rs 134.2 crore. The revenue, however, has grown by 75 percent as against Rs 692.4 crore recorded in Q4 FY21.
Goyal said the company, in the upcoming quarters, is aiming for accelerated growth along with reduction in losses. “We are clear on what our long term shareholders expect of us and we are working hard to deliver on both growth and profitability expectations,” he said.
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