The brokerage house says that the company’s business will be safe with the acquisition of Blinkit by Zomato. At the same time, the company hopes that profits will be better from this.
Zomato Stock Price: The shares of food-delivery company Zomato are seeing a decline today. Today the company’s stock fell about 5 percent to Rs 67, which closed at Rs 71 on Friday. Zomato has informed the stock exchange that the company board has approved the acquisition of 33,018 equity shares of quick commerce company Blink Commerce (formerly Grofers India). However, brokerage houses are considering this acquisition as positive. Brokerage house CLSA says that this acquisition will protect the company’s business, while the company expects that it will improve profits. Brokerage house Morgan Stanley also gave an overweight rating on the stock in its recent report.
Natural extension, the company’s market will increase
In fact, Zomato has got board approval to acquire 33,018 equity shares of quick commerce company Blink Commerce (BCPL, formerly Grofers India). It is an all-stock deal for Rs 4,447.48 crore. This acquisition is at a price of Rs 13,46,986.01 per share. Brokerage house CLSA says that the acquisition of Quick Commerce Company for Zomato is a natural extension to increase the food delivery business. This acquisition will increase the market share of the company. At the same time, business will be safe and profits are also expected to improve. The brokerage house has kept a target price of Rs 90 while advising to buy in the stock.
Share price may double
The brokerage house Morgan Stanley in its recent report had given an overweight rating on the stock of Zomato and has kept the target price of Rs 135. If you look at the price of Rs 67 today, then you can get 100% return in it. The brokerage has given this recommendation in view of Jio-bp providing EV mobility services. The brokerage says that the adoption of EVs for the last mile delivery fleet will not only help in meeting the climate related sustainability goals for Zomato, but will also improve the unit economy in the mid-term. The brokerage says that the company’s business is moving in the right direction. On the other hand, brokerage house UBS has given buy advice with a target price of Rs 130.
Shares fell 60% from record high
The stock of Zomato has become almost 60 percent cheaper than its record high. The stock had reached a price of Rs 169 in November last year. This is a 1-year high for the stock. Right now the stock has fallen 60 percent from the record high and has come down to Rs 67.
Blinkit’s operations are spread across 15 cities. The average delivery time of the company is less than 15 minutes. Average order value is higher than Zomato. In May, Blinkit had placed around 79 lakh orders and the average order value was Rs 509. This will also help Zomato to make better use of its delivery fleet.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)