Zomato shares slide 2% amid block deal; Antfin Singapore likely seller

Shares of Zomato slipped nearly 2% in early trade on Tuesday as shares worth ₹5,284.29 crore changed hands over the counter via block deal today. The name of the buyers and sellers were not known immediately, but it was reported that Antfin Singapore Holding, a subsidiary of the Alibaba Group, was looking to sell stake in the online food delivery company. As per the exchange data, Antfin Singapore Holding held a 4.3% in the Deepinder Goyal-led foodtech company. 

As many as 20.14 crore shares, representing around 2.2% stake in the restaurant aggregator, were sold in the block deal at floor price of ₹258 apiece. The floor price was fixed at a discount of around 2% over the previous closing price.

Early today, Zomato shares opened a tad lower at ₹261.55 against the previous closing price of ₹262.30 on the BSE. In the first hour of trade so far, the largecap stock declined as much as 1.98% to ₹257.10, while the market capitalisation slipped to ₹2.29 lakh crore.

The share price of Zomato touched a 52-week high of ₹280 on August 19, 2024, and a 52-week low of ₹88.16 on August 21, 2023. The stock has turned multibagger in the last one year, delivering 190% returns to its shareholders during this period. The counter has risen 109% in the calendar year 2024, while it added nearly 62% in the past six months and 17.5% in a month.

Recently, Axis Securities initiated coverage on Zomato with a ‘BUY’ call with a target price of ₹280 per share. “We expect Zomato to strengthen its presence in the food-delivery market and gain market share through its continuous adoption of new technology and bringing new innovations in the food-delivery business. This will continue to drive more number of users to the platform,” the brokerage said in a note released on July 31.

The brokerage house believes that Zomato's expansion in the quick commerce sector through Blinkit is supported by a consistent enhancement in profitability and a notable reduction in losses within the hyperpure and quick commerce domains. For Q1 FY25, Blinkit reported an adjusted EBITDA of a negative ₹3 crore, while it added 113 stores, which was higher than their guidance of 100 stores.

“The huge market potential presents a great opportunity for Blinkit, given its market leadership. We believe that the leading position is likely to be strengthened on account of strong execution – (1) faster expansion, (2) wider assortment of SKUs and categories, (3) higher ATUs, and (4) synergies between Hyperpure (supply platform for restaurant) and Blinkit,” it says.

Axis Securities estimates Blinkit’s gross order value (GOV) to see a CAGR of 38% over FY24-30E to touch $10.5 billion. Besides, the market share for Blinkit is growing with better penetration as compared to peers, it added.

For April-June quarter of FY25, Zomato reported a sharp increase in its net profit at ₹253 crore as compared to ₹2 crore during the same quarter last year. The profitability was driven by strong other income, which surged to ₹236 crore from ₹181 crore in the year-ago period. The revenue jumped nearly 74% to ₹4,206 crore as compared to ₹1,416 crore in the corresponding period last year.

On the operating front, Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at ₹177 crore as against an EBITDA loss of ₹48 crore during the same period last year. The EBITDA margin was at 4.2%.

During the quarter under review, gross order Value (GOV), which includes consumer facing businesses like food delivery, quick-commerce, and going-out, rose 53% to ₹15,455 crore. 

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)