Share of online food delivery platform Zomato snapped its four-session losing streak on Friday, rising over 4% in an otherwise weak broader market. The stock has fallen 25% since Monday after it announced the acquisition of the online quick commerce delivery platform Blinkit (formerly Grofers) in an all-stock deal for ₹4,447.5 crore.
Zomato shares opened a tad higher at ₹54 against Thursday’s closing price of ₹53.9 on the BSE. During the session so far, the stock gained as much as 4.3% to hit an intraday high of ₹56.2, driven by heavy volume. As many as 46.3 lakh shares worth ₹25.47 crore changed hands over the counter in the first two hours of trade on the BSE as compared to the two-week average volume of 43.62 lakh stocks. In sharp contrast, the BSE benchmark Sensex was trading 545 points lower at 52,496 levels at the time of reporting.
The homegrown food delivery major has had a disappointing journey on Dalal Street since its listing on July 23, 2021. The stock had listed at a 51% premium over the issue price of ₹76 per share on the BSE, while it touched an all-time high of ₹169.10 on November 16, 2021. The stock currently trades 66% lower than its 52-week high and 26% lower than its IPO price. It hit a 52-week low of ₹50.35 on May 11, 2022.
Zomato shares have been under selling stress since Monday after the company’s board approved a plan to acquire e-grocery firm Blinkit. The deal is part of the company’s strategy to exploit online grocery retail, a business segment that has seen robust growth during the Covid-19 pandemic. However, investors seem to be unhappy with Zomato acquiring the loss-making quick commerce company.
As per the deal, Zomato will acquire 33,018 equity shares of Blinkit for ₹4,447 crore at a price of ₹13.47 lakh per share. It will also issue up to 62.9 crore shares, equivalent to an equity stake of 6.88% on a fully-diluted basis, at an allotment price of ₹70.76 per share.
According to Deepinder Goyal, founder and CEO of Zomato, quick commerce has been the company’s stated strategic priority since the last one year. “We have seen this industry grow rapidly both in India and globally, as customers have found great value in quick delivery of groceries and other essentials. This business is also synergistic with our core food business, giving Zomato the right to win in the long-term,” he had said on Blinkit acquisition.
