Zomato Block Deal Alert: Alipay sold 29 crore shares, stock up 4%


  On Wednesday, Alipay, a Chinese payment company, is going to have sold around 29 crore shares of Zomato, the food delivery company, at Rs. 112 per share in a significant block sale on the BSE.

 As per the report, the owner of Alipay was looking to sell its full 3.44% interest in the transaction. A confirmation will come when bourses release block and bulk deal data. Meanwhile, the stock increased by around 4% to reach the day’s peak at Rs. 118.5 on BSE. In 2022, after falling by more than half when tech stocks struggled globally, Zomato shares have risen more than 96% this year.

 In October, SoftBank of Japan sold a 1.1% stake in Zomato, India’s largest food delivery service. In recent years, the demand for online ordering has been rapidly growing, encouraging Zomato to aggressively expand.

 Alipay has announced its departure from Zomato as other Chinese companies have started their shares in Indian enterprises. In August, a 10.3% stake in Indian financial platform Paytm was sold by China’s Antfin.

 Recently, Zomato took part in the JM Financial India Conference in 2023. Also, the company recommended 4-5% EBITDA as the percentage of gross order value as the sustainable margin for the business; this is one of the important lessons they have learned. In the September quarter, the expansion in margins was slower due to a steep increase in fixed costs, but we expect there will be revenue over the medium term.

 Since the company was acquired five quarters ago, the use of Blinkit has been steadily increasing. The government of Blinkit was 47% of Zomato’s in those cities where Zomato and Blinkit operate complementary meal delivery services in 2QFY24.

 As per JM Financial, “Zomato expects the adoption trends to remain strong in the near to medium term because of severe under-penetration.”

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