Zomato, Paytm Share Price Highlights for August 22, 2024: Zomato, Paytm shares close in red; Paytm falls 3%

Zomato, set to acquire Paytm’s entertainment ticketing business, will be launch its new app for the going-out business District, in the next few weeks. It plans to eventually transition and house its existing and acquired businesses in the going-out segment on the District app.

The food delivery and quick commerce major on Wednesday said it has inked a definitive agreement to acquire Paytm’s entertainment ticketing business for a total consideration of ₹2,048 crore. It expects this transaction to bet completed within this quarter.

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Paytm stock fell 3.14% on the NSE to close at ₹556. Zomato shares closed at ₹257.85 on the NSE, down by 0.84%.

Paytm shares fell 3.16% on the NSE, trading at ₹555.90, and Zomato shares slipped 0.30% to trade at ₹259.24 as at 3.04 pm.

Zomato shares traded at ₹258.94 on the NSE, down by 0.42% as at 12.50 pm, and Paytm stock slipped 0.99% to trade at ₹568.35.

Shares of Paytm’s owner One97 Communications rose a little over 2 per cent in the morning trade on Thursday after the fintech company said it will sell its entertainment ticketing business to Zomato for Rs 2,048 crore.

The stock of the company climbed 2.09 per cent to trade at Rs 585.05 apiece on the BSE.

On the NSE, it went up 1.82 per cent to Rs 584.50 per scrip. In the intraday trade, shares of the Noida-based fintech company advanced more than 5 per cent to Rs 604.70 and 604.45 apiece on the NSE and BSE, respectively.

Meanwhile, shares of Zomato are trading almost flat at Rs 260.30 and 260 per share on the bourses.

In the morning trade, the 30-share BSE Sensex jumped 166.24 points or 0.21 per cent to 81,071.54, while NSE Nifty advanced 46.25 points to 24,816.45.

On Wednesday, One97 Communications said it will sell its entertainment ticketing business to Zomato for Rs 2,048 crore.

PTI

Jefferies on Zomato: Maintain Buy on Company, raise target price at Rs 335/Sh (Positive) 

Nomura on Zomato: Maintain Buy on Company, target price at Rs 280/Sh (Positive) 

Elara on Zomato: Maintain Buy on Company, target price at Rs 320/Sh (Positive) 

Bernstein on Zomato: Maintain Outperform on Company, target price at Rs 275/Sh (Positive) 

UBS on Zomato: Maintain Buy on Company, target price at Rs 320/Sh (Positive) 

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Paytm shares traded flat at ₹577.15 on the NSE as at 11.08 am, and Zomato shares traded at ₹259.90.

Bernstein on Zomato

• Outperform Call, Target Rs 275
• Paytm’s Ticketing Business Acquisition Will Expand TAM For Co Into Event Ticketing Business
• Acquired Business Will Be Part Of New App ‘District’, Expected To Launch In A Few Weeks
• Co Has A Strong Track Record Of Successfully Acquiring Consumer Tech Businesses

Jefferies on Zomato

• Buy Call, Target Raised To Rs 335
• Valuation Of Paytm’s Ticketing Business Acquisition Looks Compelling In Context Of Growth Forecast
• Ultimate Margin Like Food Delivery, Low Capital Intensity Promises High Return Ratio In Steady-state
• Co Up Against Leader ‘Bookmyshow,’ The Question Is Can Zomato Do It Yet Again?

Nomura on Zomato

• Buy Call, Target Rs 280
• Mgmt Believes Paytm’s Ticketing Biz Acqn Will Help To Focus On Areas Where It Expects To Raise GOV
• Co Expects To Increase Gross Order Value From `3,200 Cr In FY24 To `10,000 Cr In FY26
• Biggest Risks Are Smooth Integration Of Acquired Businesses Into New District App
• Cash Burn Initially To Incentivize Users To Migrate From Paytm’s App To Zomato & District Apps

Digital payments firm Paytm on Wednesday proposed to cap salaries of its non-executive independent directors, as it looks to save costs amid widening losses.

Paytm’s independent board members will earn a maximum annual compensation of up to ₹48 lakh ($57,228), the company said in a release, adding the reduced pay came into effect in April.

Previously, a non-executive independent director earned as much as ₹2.07 crore a year, it said.

Paytm has reported losses after the Reserve Bank of India ordered the company to wind down its payments banking unit in January.

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According to Zomato, the proposed acquisition will help it gain meaningful scale in the events ticketing category. The deal will also help expand the available use-cases for Zomato’s customers to movie and sports ticketing, amongst others thereby improving customer engagement. In fact, Zomato intends to spin-off the entire Going-out segment into a new app (District) that could help it better cater to the customers’ needs. The total deal value is INR 20.48bn (subject to cash and net working capital adjustments at closing). The all-cash deal values the target at ~1x EV/GOV (~7x Sales/ ~71x Adj. EBITDA) and is likely to be closed in 2QFY25 itself.

We tweak our near term estimates for Goingout segment following management guidance to operate it at break-levels and likely cash outflow towards the proposed M&A. However, medium to long term estimates are raised to factor-in the positive impact of the acquisition. We continue to assign a target multiple of 75x and roll forward to Mar’27 EPS to derive a revised TP of INR 300 (vs. INR 260 earlier). Zomato continues to be one of our preferred picks in the listed Internet space as we believe it is well positioned to benefit from robust industry tailwinds across its B2C businesses. Its balance sheet r strong with net cash of INR 125bn as of Jun’24. 

Maintains Buy

Zomato shares traded flat at ₹259.39 on the NSE, while Paytm shares were up 1.72% on the NSE to trade at ₹530.90 as at 10.18 am. 

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“OCL will transfer its entertainment ticketing business to Zomato by transferring the ticketing business to its 100 per cent subsidiaries, Orbgen Technologies Pvt Ltd (OTPL) and Wasteland Entertainment Pvt Ltd (WEPL), and selling 100 per cent stake in OTPL and WEPL, which operate the TicketNew and Insider platforms, respectively, to Zomato,” a stock exchange filing read.

The transfer will include about 280 existing employees from the entertainment ticketing business.

The transaction value is subject to cash and net working capital adjustments at closing.

Zomato on Wednesday said it will acquire Paytm’s movie and events ticketing business for ₹2,048.4 crore. This will allow the food delivery major to strengthen its “going out” business, while enabling Paytm to focus on its core payments and financial services distribution businesses.. 

In a BSE filing, the two companies said their boards had approved the share purchase and subscription agreement.

In a statement, ​​One 97 Communications Ltd (OCL​​) said “it has entered into definitive agreements for the sale of its entertainment ticketing business that includes movies, sports and events (live performances) ticketing to ​​Zomato Ltd​​“

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Paytm stock rose 3.35% to trade at ₹593.30 as at 9.39 am, and Zomato traded flat at ₹260.17.

Paytm shares rose 2.65% on the NSE, trading at ₹589.25 as at 9.20 am, while Zomato stock was up over 1%.