Shares of Zomato Ltd are in focus today as Antfin Singapore Holdings, a subsidiary of Ant Financial Group, plans to offload a 1.54% stake in the food delivery platform via a block deal. The transaction, valued at around ₹3,420 crore ($408 million), is expected to be a key highlight in the Indian markets today.
Antfin to Sell 13.6 Crore Shares at ₹251.68 Floor Price
As per the block deal offer document, Antfin Singapore intends to sell 13.6 crore shares of Zomato at a floor price of ₹251.68 per share. This price represents a 4% discount to Zomato’s closing price of ₹263.24 on the National Stock Exchange (NSE) on Monday.At the end of the June quarter, Antfin Singapore Holding Pte. Ltd. held a 4.3% stake in Zomato, which was valued at nearly ₹10,000 crore based on Monday’s closing price.Following the block deal, Antfin’s stake will decrease to 2.76%.
Global Investment Banks Managing the Deal
Morgan Stanley and Goldman Sachs have been appointed as the placement agents for this block deal. The selling shareholder will also have a lock-in period of 90 days for further sale of shares.
Zomato’s Strong Performance and Stock Rally
The block deal comes on the back of Zomato’s robust quarterly earnings. In the April-June period, the company reported a 126.5 times surge in net profit to ₹253 crore, driven by increased platform fees and improved profitability in its quick commerce arm, Blinkit.Zomato’s stock has been on a tear, providing a 110.68% return in 2024 and surging 327.20% over the past two years. On Monday, the stock hit a record high of ₹280.90 before closing at ₹263.24, down 0.45% from the previous session.
Brokerages Maintain Positive Outlook
Despite the block deal, brokerages remain bullish on Zomato. Global investment bank UBS has maintained its ‘Buy’ recommendation on the stock and increased its price target from ₹260 to ₹320. This is the second highest target on the street after CLSA’s ₹350 price target.In a note, UBS said, “We increase our GMV estimates for food delivery (+2-3%) and quick commerce (+20-30%) for FY26-28e following the strong Q1 and solid guidance. Our adj EBITDA estimates for the next 1-2 years are up only slightly as investments in building supply for quick commerce will likely result in a more modest margin trajectory.”The brokerage also mentioned that it has increased employee cost estimates to reflect investments in manpower. “These changes, coupled with roll forward of our valuations and higher multiples for Going Out and Hyperpure, lead to higher PT of Rs320. Zomato is trading at FY27e EV/EBITDA of 35x, vs avg of Indian consumer / retail peers at 30x, with a superior growth and margin expansion profile,” UBS added.
Potential Market Impact
The Zomato block deal is expected to garner significant attention from investors and analysts alike. As the stock has been a market darling, the transaction could influence investor sentiment and trading activity in the broader markets.Given the strong performance and growth prospects of Zomato, the block deal is unlikely to have a major impact on the stock’s long-term trajectory. However, short-term volatility cannot be ruled out as the market digests the news of Antfin’s partial exit.The successful execution of the block deal could also set the stage for further consolidation and strategic moves in the Indian food tech space. Investors will closely monitor Zomato’s ability to sustain its growth momentum and profitability in the coming quarters.In conclusion, the Zomato block deal is a significant event that underscores the company’s strong position in the food delivery market and the confidence of global investors in its growth story. As the stock remains in focus, market participants will keenly follow the developments surrounding the transaction and their implications for Zomato’s future trajectory.
