Zomato shares fell more than 6 percent on Monday after announcing that the online food delivery platform would acquire Blink Commerce (formerly Grofers) for rupees. 4,447.48 million.
The stock fell 6.40% to settle at Rs. The BSE is 65.85. During the day, it fell 7.53 percent to Rs. 65.05. On the NSE, it fell 6.59 percent to close at Rs. 65.85 pieces. Zomato said on Friday that it will acquire Blink Commerce for rupees. A $44.4748 million share-swap transaction was made as part of its Fast Commerce business investment strategy.
The company’s board at a meeting on Friday approved the acquisition of up to 33,018 shares of Blink Commerce from its shareholders for a total consideration of Rs. 4,447.48 crore at Rs. Zomato said in a regulatory filing, 1.345 million shares per share.
Blink Commerce runs online express commerce services under the Blinkit brand. It was formerly known as Grovers. The transaction will be conducted through the issuance and allotment of up to 628,500 fully paid up share capital of Zomato par value Re. 1 for Rs. On a concessional basis, it added 70.76 shares per share.
The company currently holds 1 equity stake and 3,248 preferred shares in BCPL, the filing said.
Founder and CEO Shivam Bajaj said: “This high-burning industry faces stiff competition from Zepto, Dunzo, Swiggy Instamart, BigBasket and others, and it will be interesting to see how this expensive investment from Zomato plays out in the future.” Avener Capital, on the Zomato – Blinkit deal.
Although the company made solid gains in its stock exchange listing last July, it couldn’t capitalize on it further.
“Zomato’s recent announcement of the acquisition of Blinkit is expected to exacerbate its high operating loss woes. Blinkit creates synergies with Zomato’s food delivery business, which management expects to grow significantly in the future. However, the fast commerce market, Swastika Investmart Equity Research Analyst Punit Patni said of the drop in Zomato’s share price:
Additionally, current market conditions are not conducive to businesses that are growing without profit, Patni said, adding that the company is only suitable for investors with a high risk appetite and a long-term view. The company’s current market capitalization is Rs. Data from the National Stock Exchange showed that it was 522.42 billion.
Brokerage firm JM Financial believes that Zomato Group’s earnings path following the acquisition of Blinkit can be extended by at least a year from FY25 to FY26, given the intense competition in the fast commerce space.