Zomato Shares Surge 4% as Board Considers Potential Acquisition

The share price of Zomato increased by 4 percent after the board meeting was scheduled on June 24. The share price was recorded at ₹68.60.

On Wednesday, the share price of Zomato was recorded at ₹68.60 showing a gain of 5.5 percent in the last few trading days and an intraday gain of 3.7 percent.

The company’s share price had been declining after the delay of its acquisition.

The company has seen a decline in share prices of approximately 51 percent and a gain of 16 percent this month.

The share price has been fluctuating. After the announcement of the acquisition meeting on June 24, the share prices have risen. These prices are expected to stabilize after the final acquisition decision. 

Initially, the meeting for the acquisition was scheduled for June 17 but it was postponed. The reason stated by officials was the company’s interest to take large shareholders into confidence.

The company has also mentioned its concern with big investors and institutional shareholders. 

The Zomato and Blinkit acquisition deal is a swap deal where Zomato will get 10 shares by exchanging its single share. The exchange will happen in 1:10 proportion.

According to Zomato’s current market valuation, the deal will cost Blinkit $700-800 million which is lower than their initial valuation of $1 billion. Deepender Goyal, Chief Executive Officer (CEO) of Zomato had committed to providing a short-term loan of $150 million to fulfill the company’s near-term capital requirements.

The CEO has also appreciated the company’s progress in the last six months and is eager to work in-depth with the company. 

Zomato Share Price.

The famous food delivery company has marked the biggest Initial Public Offer (IPO) in March 2020. The company raised ₹9,375 crores last year. The shares were listed at ₹76 per share.

The company’s IPO decision was a big hit. The share price kept rising with the highest recorded at ₹169 in November. But the share price has declined in the past six months. 

In the past six months, the share price has dipped around 51 percent against the Sensex fall of 8 percent. The current market capitalization of the company is estimated at $6.80 billion.

In the past month, the company’s share has seen a gain of 18 percent and a 4 percent decline according to Sensex. 

The company faced financial loss in Q4. The revenue has grown up to ₹692.4 crores. Besides, last month the net loss was recorded at ₹359 crores.

This loss has increased to ₹1211.8 crores resulting in a decline in share prices for the company. The loss last year was recorded at ₹134.2 crores which has seen triple.

The company has taken efforts to recover from this loss, yet it has not been successful. During Q1 the company has stated its intentions for better capital allocation.

The company was criticized for providing excessive discounts which led to losses. This was fixed by the company by partnering with other giants and providing better offers benefitting both companies. 

With the new acquisition plan, the company is not only expected to provide better services but also will see a rise in the market. For both the companies, many factors will benefit their respective growth.

While everyone is eyeing this business deal, the companies will pass their final decision soon. It is expected that after the meeting on June 24, the verdict will be passed. This deal is expected to mark further growth for both companies and better service provision.