Zomato share price rose 4.4% on Thursday to hit an intraday high of Rs 79.35 per share, as the scrip rebounded after having closed below the IPO price of Rs 76 apiece yesterday. The online food-delivery giant is said to be in talks to acquire 10-minute grocery delivery platform Blinkit (formerly known as Grofers), in a share swap deal. Blinkit acquisition could pave the way for Zomato to enter the e-grocery space, which is getting competitive by the day. However, analysts recommend investors stay away from Zomato stock, for now, citing various headwinds and predict more cash-burn.
No appetite for Zomato stock
According to Zomato’s current market capitalization, the company is valued at a little over $8.1 billion, which looks expensive, Amit Jain, Chief Strategist – Global Asset Class, Ashika Group told FinancialExpress.com. “As of now market cap of Zomato is close to $8 billion, which looks expensive as with Blinkit acquisition it will burn more cash and it will put further strain on the balance sheet of Zomato, hence medium-term investors may wait for more price and time correction,” he added.
While Zomato has a market capitalization of $8 billion, its online food-delivery rival Swiggy, recently raised funds at $10.7 billion post-money valuations. Highlighting this, Divam Sharma, Founder at Green Portfolio — a SEBI Registered Portfolio Management Service, advised avoiding the stock as of now. “For retail investors, we would suggest avoiding the stock for now and waiting for the growth to come and the synergies from investments and Blinkit acquisition to come,” he said while adding that he would like to see growth in the core business which is food delivery.