Zomato denies Shiprocket acquisition; share surges 2.7%

Shares of Zomato surged as much as 2.7% at ₹128.50 apiece on BSE after the foodtech company issued a statement denying its plans to acquire Shiprocket. In the past week, the share has risen 4%, while it gained 10.67% in a month. In the past 6 months, YTD period and 1 year, the stock has risen 71.62%, 111.61%, and 116.45% respectively.

“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,” the company released in a filing exchange.

Deepinder Goyal-led company says that it 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".

Shiprocket is a B2B logistics tech startup that offers shipping and fulfilment services to direct-to-consumer (D2C) brands and omnichannel sellers in various sectors, including apparel, electronics, beauty and personal care, and grocery. Its range of services includes discovery, order management, warehouse and fulfilment, shipping, order tracking, and returns.

Prior to Zomato's clarification, Jefferies, in a report, expressed scepticism about the likelihood of the Shiprocket deal. Zomato already holds a 5% stake in Shiprocket following an investment in 2021. Jefferies suggested that if the acquisition were to happen, Zomato's shares might experience weakness. The perceived lack of relevance in this potential acquisition, despite potential linkages with quick commerce and hyperpure, was cited as a reason.

The international brokerage assigned a low probability to the deal, reasoning that Zomato's management is currently occupied with quick commerce. Analysts noted that Zomato has a history of acquisitiveness, sometimes making investments that appear less directly relevant. Additionally, with $1.4 billion on its books and existing businesses not expected to demand significant investment, the need for such a deal is seen as questionable.

In Q2 FY24, the company led by Deepinder Goyal recorded a consolidated net profit of ₹36 crore. This marks a significant improvement compared to a profit of ₹2 crore in the preceding quarter of FY24 and a loss of ₹251 crore in the same quarter of the previous year. The consolidated revenue from operations witnessed a substantial year-on-year increase of 71.46%, reaching ₹2,848 crore as opposed to ₹1,661 crore in the corresponding quarter last year. On a sequential basis, the revenue showed a growth of 17.9% from ₹2,416 crore in the first quarter of FY24.

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