Zomato shares increase by 5% amid brisk trade; Softbank is expected to sell; and HSBC raises its target price

The early trading session on Wednesday saw a strong increase in Zomato shares due to block deal rumours and favourable feedback from international brokerage companies. Since the Blinkit investors' share lock-in period expired, the stock has been on investors' radar screens.

SVF Growth Singapore, a subsidiary of SoftBank Group, is most likely to sell its 1.17 percent share in the business for at least Rs 940 crore. 10 billion shares will be sold by SVF Growth Singapore at a floor price of Rs 94 per. The trade has partially been consummated, based on the busy exchange. Business Today, however, was unable to independently confirm the same.

As of 9.35 am on Wednesday, 6.4 crore equity shares worth a total of Rs 629.82 crore were traded, according to statistics from the National Stock Exchange (NSE). Likewise, as of the same time on BSE, 34.65 lakh equity shares were exchanged for a total value of Rs. 34.05 crore.

Zomato shares rose more than 5% on Wednesday to Rs 99.50 before partially giving up their gains, giving the company a market worth of close to Rs 85,200 crore. The stock ended Tuesday's trading session at Rs 94.65. The stock has increased by roughly 125% since it hit a 52-week low in January of this year at Rs. 44.35.

HSBC, an international investment banking company, raised its target price for Zomato from Rs. 102 to Rs. 120 while maintaining the 'buy' rating.

With a target price of Rs 115 per share, global brokerage company Morgan Stanley has kept its 'overweight' rating on Zomato. According to the foreign investment banker, if the business honours its platform fee, it may result in increased profitability.

An earlier open market deal saw Tiger Global's Internet Fund III Pte sell its whole 1.4% share in the meal delivery service Zomato. That share, which it acquired as part of the Blinkit acquisition for $136 million and sold on Monday as soon as the lock-in period ended, was acquired by the company. To raise roughly Rs 1,124 crore, the New York-based company sold 12.35 lakh shares at a price of Rs 91.01.

The lock-in period for SoftBank's 3.35 percent interest in Zomato, which was provided as part of the Blinkit contract for selling the firm its investment, terminated on August 25.

In contrast, Zomato has been putting more emphasis on profitability and has made the decision to introduce a platform charge of Rs 2-3 in a few places. Regardless of the overall cost of the products in the shopping cart, this platform fee will still be charged. Even Zomato Gold subscribers are subject to this charge.

The June 2023 quarter marked Zomato's first-ever swing towards profitability. In comparison to a loss of Rs 186 crore during the same time last year, the food aggregation platform firm declared a consolidated profit after tax of Rs 2 crore. Operating revenue increased 71% year over year to Rs 2,416 crore in Q1FY24 from Rs 1,414 crore in the same quarter last year.