After a firm opening, shares of online food delivery platform Zomato slipped into the red on June 27 after company's board approved the acquisition of Blink Commerce.
The stock opened at Rs 73 apiece on the BSE, up nearly 3 percent from the previous close. At 11:18am, it declined nearly 5 percent to Rs 66.95 apiece, while the 30-share benchmark index was up 541.53 points or 1.03 percent at 53,249.99.
On June 24, after market hours, Zomato had informed the bourses that its board has given its approval for acquisition of up to 33,018 equity shares of quick commerce company Blink Commerce (BCPL) (formerly known as Grofers India) for Rs 4,447.48 crore in an all-stock deal.
The acquisition is at a price of Rs 13,46,986.01 per share by issuance and allotment of up to 62,85,30,012 fully paid-up equity shares of the company having face value of Re 1 each at a price of Rs 70.76 per equity share, it said in the stock exchange filing.
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Company also said that it has entered into an amendment to the definitive agreement dated June 28, 2021 with Grofers International Pte. Ltd, Hands on Trades Private Limited (HOTPL) and Albinder Singh Dhindsa, modifying certain rights of the company's in relation to its existing investment in HOTPL (agreement).
The agreement shall come into effect post completion of the acquisition of BCPL by the company.
Here is what brokerages have to say about stock and the company post acquisition of Blink Commerce:
CLSA
Broking house CLSA has maintained buy rating on Zomato with a target at Rs 90 per share.
The company is going to acquire Blinkit in a stock deal valuing Blinkit at USD 626 million.
The company believes quick commerce is a natural extension of its food delivery business and Blinkti acquisition will expand its addressable market.
Blinkti will aid its potential profit pool & make its business more defensible, reported CNBC-TV18.
Credit Suisse
Research firm Credit Suisse has kept outperform rating on the stock with a target at Rs 90 per share.
The Blinkit acquisition is on expected lines and will likely raise EBITDA loss in FY23/FY24.
The company has not guided on total dark stores or near-term profitability. The annualising May 2022 EBITDA loss could reduce its FY23 adjusted EBITDA by Rs 756 crore.
The food delivery business is trending to profitability, while cash reserves ensure sufficient funding for growth initiatives in near term, reported CNBC-TV18.
BofA Securities
Research firm has kept neutral rating on the stock with a target at Rs 82 per share.
The Blinkit deal is well flagged in advance with 7% dilutive to shareholders.
The competition impact felt over time, while breakeven delays risks.
Blinkit acquisition price is lower than the last round valuation of USD 1 billion, reported CNBC-TV18.
UBS
Brokerage house UBS has kept buy rating on Zomato with a target at Rs 95 per share.
The company reiterated earlier guided upper limit of USD 400 million over next 2 years.
The lower valuation & reiteration of upper limit in further investments into Blinkit are positives, reported CNBC-TV18.
At 09:19 hrs Zomato was quoting at Rs 70.90, up Rs 0.55, or 0.78 percent on the BSE.
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