Zomato acquires entertainment ticketing business from Paytm; Jefferies sees 29% potential upside
Zomato shares in Thursday's session rallied nearly 3 per cent to day's high price of Rs 267 as the food services firm acquired the entertainment ticketing business from Paytm in a deal worth Rs 2,048.4 crore. The company's approved the acquisition of movie and event ticketing businesses from One 97 Communications (#Paytm), Wasteland Entertainment, and Orbsgen Technologies.
Zomato expands into entertainment sector
Zomato to gain 100% shareholding and control of these businesses. This acquisition aligns with Zomato’s strategy to diversify its offerings and expand into the entertainment sector.
Acquisition seen to be done at fair price
Zomato said that the acquisition of the new business is carried out at ~1.0x trailing Enterprise value / FY24 GOV multiple, which it believes is fair vis-a-vis relative valuations of other comparable companies. The new age company expects the transaction to close within this quarter
Zomato to have 3 business apps
Food delivery - Zomato
Groceries - Blinkit
Going out business - District
Zomato on August 1 announced the launch of 'District,' a new app consolidating "going-out" business, including dining and ticketing (movies and events), an ambitious expansion beyond its core food delivery services and hyper commerce.
Jefferies fresh raised target of Rs 335 implies 29% potential gains
Jefferies continues with its buy rating and has raised the target to Rs 335. The brokerage stated that the company's valuation looks compelling in the context of growth forecast and ultimate margins. The brokerage likes its food delivery model, low capital intensity promises a high return ratio in the steady state. The third clear growth vector is established. Furthermore, the brokerage added that the company will probably focus on market share, with even the potential to claim leadership, which may entail investments.
Bernstein too maintains bullish view
Bernstein has maintained buy on the stock for a target of Rs 275, implying gains of nearly 6 per cent. The brokerage maintained the company's acquisition will expand Zomato's TAM or total addressable market in the event ticketing business. The company's new acquisition will be part of its new app 'District' slated to be launched in few weeks time.