Block deal: Zomato shares in focus as Alipay may sell 3.4% stake today

Shares of online food delivery giant Zomato Ltd will be in focus on Wednesday morning amid a report suggesting Chinese payments group Alipay was looking to offload its entire 3.44 per cent stake in the listed company for about $400 million (or Rs 3,331.60 crore at rupee-dollar exchange rate of 83.29) via block deals.

Data available with BSE suggests Alipay Singapore Holding Pte Ltd held 29,60,73,993 shares or 3.44 stake (3.5 per cent voting rights) at the end of September quarter.

Reuters cited the term sheet and suggested that the block deals are likely to be executed at Rs 111.28 per share, a 2.2 per cent discount to Zomato's closing price of Rs 113.80 on Tuesday. Earlier in October, SoftBank had sold 1.1 per cent stake in Zomato for about Rs 1,040 crore. Zomato Ltd shares are up 88 per cent year-to-date.

Bank of America and Morgan Stanley are said to be the advisers on the deal, which is likely to be executed later this week on Indian exchanges, three sources told Reuters.

Zomato recently participated in JM Financial India Conference 2023. Among key takeaways was the fact that the company continued to suggest 4-5 per cent Ebitda as percentage of gross order value (GOV) as the sustainable margin for the business. It noted that the expansion in the margins was slower in the September quarter due to sharp increase in fixed costs but expects there are enough revenue as well as cost side levers to ensure that the sustainable margin target is achieved over the medium term.

"Blinkit has been seeing steady adoption since its acquisition 5 quarters back. In cities where Blinkit has an overlapping presence with Zomato’s food delivery business, the former’s GOV was 47 per cent of the latter’s GOV in those cities in 2QFY24. Zomato expects the adoption trends to remain strong over the near to medium term on account of significant under-penetration," JM Financial suggested Zomato as saying.

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