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Zomato claws back some ground in wake of giant block deals – Moneycontrol

The stock briefly erased all its losses to hit a high of Rs 55.95. At 9.40 am, the scrip was trading at Rs 54.25 on BSE, down 2.4 percent from its previous close of Rs 55.60.

Food delivery firm Zomato witnessed a series of block deals on Wednesday as part of which around nine percent stake changed hands in 32 trades, Bloomberg reported, sending the stock down 9.6 percent at open before erasing all losses and then trending down 2.4 percent from its previous close. Details of buyers and sellers were not available.

The stock briefly erased all its losses to hit a high of Rs 55.95. At 9.40 am, the scrip was trading at Rs 54.25 on BSE, down 2.4 percent from its previous close of Rs 55.60.

This comes after CNBC-TV18 said promoters of India’s largest food delivery aggregator would sell 7.8 percent stake.

CNBC Awaaz had earlier reported: “A big block deal is expected in food delivery aggregator Zomato today, with Uber likely to sell off its 7.8 percent stake in the food delivery company via the transaction.”

The offer is around Rs 2,938 crore or $373 million, with a price range of Rs 48-54 per share. The offer size will be equivalent to 612 million or 7.8 percent of the existing total outstanding shares.

BofA Securities will be the sole bookrunner for the deal.

Zomato closed at Rs 56 on the BSE on Tuesday, up 20 percent, after the company reported that its net loss narrowed 48 percent to Rs 186 crore in the June quarter. The firm also said that its food delivery segment had broken even during the period.  The management said it aims to hit break-even in terms of adjusted EBITDA by the fourth quarter of FY23 and at the most by the second quarter of FY24.

Following the sharp correction so far this year in Zomato share price, the stock now trades at 0.9x 1Y forward EV/GMV and 3.5x EV/revenue. While this is at a premium to global and regional peers, analysts say the valuation is justified.

“Zomato continues to widen its market share gap, as per our estimates. Zomato remains a disruptor in this space, and continues to expand the restaurant ecosystem approach. Increase in contribution margin reflects the ability to exercise control over costs, given that the revenue levers are already in place. We continue to remain watchful on the sustenance of these trends, and believe that the stellar trends exhibited this quarter shall come under stress,” said B&K Securities.

Moneycontrol News

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