Zomato Shares In The Black On Acquisition Of Paytm's Entertainment Ticketing Business

Zomato's shares were up on Thursday after the company said it would acquire Paytm's entertainment ticketing business. 

What Happened: Zomato is set to buy out Paytm's entertainment ticketing business for ₹2,048 crore. The deal includes ticketing for movies, sports, and events.

The transfer consists of the TicketNew and the Insider platforms as well as around 280 employees working in the verticals. The deal is expected to be finalised within the September quarter, subject to the fulfilment of all closing conditions.

Brokerage Views: Jefferies maintained a "buy" call on Zomato and hiked the target price to ₹335. The brokerage firm said the valuation of Paytm's ticketing business acquisition looks compelling in the context of the growth forecast and ultimate margins.

Like the food delivery business, the low capital intensity of the ticketing business promises a high return ratio in a steady state, it added. The research firm said that this established the third clear growth vector for the company. 

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Bernstein also shared an "outperform" call with a target price of ₹275. Paytm's ticketing business acquisition will expand the total addressable market for the company into event ticketing business, the brokerage said.

The acquired business will be a part of the new app, “District”, which is expected to launch in a few weeks, the research firm added. Bernstein pointed out that Zomato has a strong track record of successfully acquiring consumer tech businesses. 

Nomura also had a "buy" call with a target price of ₹280. The brokerage pointed out that the company's management believes the acquisition will help to focus on areas where it expects to raise gross order value.

The research firm expects its gross order value to grow to ₹10,000 crore in FY26 from ₹3,200 crore in FY24. The major risks include smooth integration of the acquired business into the new District app, the research firm said. It also added that the company will need to burn cash to initially incentivise users to migrate from Paytm's apps to the Zomato and District apps. 

Price Action: Shares of Zomato were up 1.14% to ₹263 on Thursday. 

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