Zomato surges 3% on Paytm’s ticketing business acquisition, brokerages predict 29% upside
Zomato's shares surged 3% following its acquisition of Paytm's ticketing business, marking a strategic expansion into the event and travel booking sectors. This move has sparked optimism among analysts, with brokerages setting target prices as high as Rs 335 for the stock.
On Wednesday, the company's board of directors approved a share purchase and subscription agreement with One 97 Communications (Paytm operator), Wasteland Entertainment Private Limited (WEPL), and Orbgen Technologies Private Limited (OTPL) to acquire their entertainment ticketing business.
Under the agreement, One 97 Communications will transfer its movie ticketing business to Orbgen Technologies Private Limited (OTPL) and its sports and events ticketing business to Wasteland Entertainment Private Limited (WEPL) through a slump sale.
Zomato will acquire the entire stake owned by OCL in OTPL and WEPL through a share purchase transaction, making OTPL and WEPL wholly-owned subsidiaries of Zomato. The estimated cost of acquiring OTPL is Rs 1,264.6 crore, while WEPL is valued at Rs 783.8 crore, according to a company filing with the stock exchanges.
Here is how brokerages view this update:
Jefferies: Buy | Target Price: Rs 335
Valuation looks compelling in the context of growth forecast and ultimate margins. While Jefferies likes food delivery, low capital intensity promises a high return ratio in the steady state. The third clear growth vector is established and the company will probably focus on market share, with even the potential to claim
