Zomato Block Deal: Shares worth ₹1,127 crore exchange hands at ₹120.5 each

Shares of online food delivery giant Zomato Ltd will be in focus in trade Friday amid a large block deal that took place in the stock in a pre-market trade.

About 9.35 crore shares of the food delivery aggregator exchanged hands in the block deal. The number of shares that exchanged hands amounted to 1.06%% of the company's total equity.

The shares exchanged hands at an average price of ₹120.5 apiece, taking the total transaction value to ₹1,127 crore. The buyers and sellers in the transaction are not known yet.

CNBC-TV18 reported on Thursday citing sources that Japanese conglomerate SoftBank's venture capital fund SVF Growth (Singapore) Pte is likely to divest a 1.1% stake in Zomato via a block deal.

SoftBank has been consistently reducing its holding in Zomato. In October 2023, SoftBank, via its affiliate SVF Growth Singapore, executed a bulk deal, selling a 1.09% stake in the food delivery platform for ₹1,040.5 crore.

Earlier in August, SoftBank had pared a 1.16% stake in Zomato for ₹947 crore through an open market transaction.

According to reports, the Japanese conglomerate had received shares of Zomato after the platform acquired Blinkit in August last year. There was a lock-in period of 12 months for these shares. With the expiry of the lock-in period in August 2023, SoftBank has started offloading the shares. SoftBank was an investor in Blinkit, the reports stated.

With a 'Buy' call, global brokerage firm Citi remains bullish on the Zomato stock. The brokerage has a target price of ₹145 per share on the counter.

Shares of Zomato have corrected approximately 7% since the conclusion of the World Cup, Citi said. This correction could be due to media reports about non-payment of GST on the delivery fee collected by the platform from consumers. The new GST would add ₹5 per order to non-Zomato Gold orders and may further support the adoption of Gold programme loyalty, it said.

UBS has also increased its target price on the counter to ₹150 per share from ₹125. It cited a near 500 basis points improvement in the food delivery margins and 860 basis points improvement in overall margins between FY23 to FY26.

Zomato's shares have been outperformers since the beginning of this year with the stock rising over 100%. The stock has surged since the firm delivered two consecutive quarters of quarterly profit.

As many as four analysts tracking the Zomato stock expect the shares to cross its previous record high of ₹160 in a year.

Twenty-five out of the 29 analysts that track Zomato have a 'Buy' rating on the stock, while the other four have a 'Sell' rating. The stock has gained 91.22% in the last one year.