Zomato Refutes Shiprocket Acquisition Report, Jefferies Sees 26.6% Likely Return

Online food delivery provider Zomato Ltd shares witnessed a gain of 2.00% intraday on BSE to 130.10 per share at 11:05 am on Friday, December 22, 2023. A day before, Zomato sought to refute reports to acquire Shiprocket for $2 billion.

The company issued a BSE filing stating, "We have noticed that there are certain news articles circulating in the mainstream media with the subject "Zomato offers to acquire Shiprocket for $2 billion". We deny this statement and would like to caution investors against such incorrect news floating in the market. We remain focused on our existing businesses with no plans for any acquisition at this moment.

Kindly note that the Company does not comment on media speculation but is clarifying this information out of abundant caution, given the large size of the deal mentioned in the news article and the uncertainty that it may create in the market, added the BSE filing.

CEO Deepinder Goyal rubbished reports of the company planning to acquire Shiprocket for $2 billion as he took to X (formerly Twitter) to state, "We have noticed that there are certain news articles circulating in the mainstream media with the subject 'Zomato offers to acquire Shiprocket for $2 billion'. We deny this statement and would like to caution investors against such incorrect news floating in the market."

Amid the current developments, Jefferies stated in a report that the Shiprocket deal appears unlikely. Zomato owns 5% stake in Shiprocket. According to them, if the acquisition goes through, Zomato's shares could trade "weak" since on the face of it this seems an unrelated acquisition even though quick commerce and hyperpure may have some linkages.

"Hence, diversification seems very unlikely to us at this stage," Jefferies added. Meanwhile, the brokerage firm has assigned buy call to Zomato shares with target price of Rs 165 apiece. If you buy Zomato shares at current market price of Rs 130.25 apiece, you can fetch likely return of 26.68%.

IRCTC Tied Up With Zomato: Meanwhile, Indian Railway Catering and Tourism Corporation Ltd on October 17 informed BSE that it has tied up with Zomato for the delivery of pre-ordered meals, according to regulatory filing of IRCTC. Passengers can avail Zomato's service in five railway stations. IRCTC took to X platform to share the latest update:

According to IRCTC's regulatory filing dated October 17, "Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that in view of widening the range of options available to rail passengers for ordering food of their choice under IRCTC's E- Catering segment, IRCTC has tied up with M/s. Zomato Limited for supply and delivery of preordered meals through IRCTC's E-catering portal as a Proof of Concept (PoC) in the first phase at five Railway stations i.e. New Delhi, Prayagraj, Kanpur, Lucknow & Varanasi."

Zomato Stock Performance & Return Over Years: Current market price of Zomato share on BSE is Rs 130.25 per share with intraday gain of 2.12%. Zomato shares opened at Rs 130.30 per share, touched day's high of Rs 130.65 per share, and day's low of Rs 127.35 apiece, respectively. The stock's 52-week high price is Rs 131.75 apiece and 52-week low price is Rs 44.35 per share, respectively. Zomato has a market capitalisation of Rs 1,12,153.04 crore. Meanwhile, Zomato shares hit 52-week high on December 19 when the stock price touched 131.75 apiece. Zomato stock offered a return of 114% YTD, soared 118% in last 1-year, and declined 7% in last 2-years.

Zomato Financials: The company for the quarter ended June 30, 2023 announced its consolidated net profit at Rs 2 crore as against the loss of Rs 186 crore reported in the corresponding quarter of last fiscal. It declared a loss of Rs 189 crore for the quarter ended March. Meanwhile, its revenue from operations declared at Rs 2416 crore, up 71% YoY against Rs 1414 crore announced in the year ago period.

About Zomato: It was launched in 2010. Its technology platform connects customers, restaurant partners and delivery partners, serving their multiple needs. Customers use Zomato platform to search and discover restaurants, read and write customer generated reviews and view and upload photos, order food delivery, book a table and make payments while dining-out at restaurants.

On the other hand, it provides restaurant partners with industry-specific marketing tools which enable them to engage and acquire customers to grow their business while also providing a reliable and efficient last mile delivery service. It also operates a one-stop procurement solution, Hyperpure, which supplies high quality ingredients and kitchen products to restaurant partners. It also provides our delivery partners with transparent and flexible earning opportunities.

Disclaimer:

The stock has been picked from the brokerage report of Jefferies. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.