SoftBank Likely To Divest 1.1% Zomato Stake For INR 1,023 Cr

SUMMARY

SoftBank's SVF Growth Fund will look to sell 9.3 Cr shares in Zomato in the per-share price range of INR 109.4 to INR 111.65

At the lower end of the price spectrum, the planned deal represents a discount of more than 2% on the stock’s closing price on October 19

This comes a couple of months after SoftBank sold a 1.16% stake in Zomato for INR 947 Cr via open-market transactions

Japanese tech investor SoftBank is planning to offload a 1.1% stake in Indian foodtech major Zomato for at least INR 1,023.6 Cr ($123 Mn) on Friday (October 20), according to a CNBC-TV18 report.

Citing sources, the report has stated that SoftBank’s SVF Growth Fund (Singapore) will look to sell 9.3 Cr shares in Zomato in the price range of INR 109.4 to INR 111.65 per share. The lower end of the spectrum represents a discount of more than 2% on the stock’s closing price on Thursday. Kotak Securities is managing the stake sale on behalf of the investors.

On August 30, the tech investor offloaded 1.16% of its stake in the foodtech major for a cumulative sum of INR 947 Cr. In the same month, it was reported that the Japanese tech investor realised exits to the tune of $5.5 Bn from its India portfolio since commencing operations in Mumbai in late 2018. Of this, $1.5 Bn was made in the last 12 to 18 months.

Recent months have also seen US-based hedge fund Tiger Global selling a 1.44% stake in Zomato and exiting the company via open-market transactions for INR 1,123 Cr.

The investors have been on a selling spree, as they look to book profits on the back of the foodtech major making a bull run on the bourses.

The stake sale by SoftBank follows Zomato inking a partnership with ticketing major IRCTC to supply and deliver pre-ordered meals to train passengers on a pilot basis. Since then, the foodtech giant’s stock has hit 52-week highs multiple times, bagging thumbs up from several brokerages

The Zomato stock has jumped 88.28% so far this year.

Just last week, Kotak Institutional Equities gave a BUY rating to the Zomato stock with a target price of INR 125 per share. The brokerage firm noted that the company’s gross merchandise volume (GMV) growth bottomed out in the first quarter (Q1) of the financial year 2023-24 (FY24) at 14% year-on-year (YoY). It added that the foodtech major was on track to witness improvement from Q2 FY24 onwards.

Meanwhile, brokerage firm JM Financial, too, noted that Q2 would be a crucial quarter for Zomato in showing its ability to sustain profitability.

The company clocked a food delivery gross order value (GOV) of INR 7,318 Cr in Q1 FY24 while Blinkit reported a GOV of INR 2,140 Cr during the same period.

Overall, Zomato reported its maiden profitable quarter in Q1 FY24. It posted a profit after tax (PAT) of INR 2 Cr, against a net loss of INR 186 Cr in Q1 FY23. On similar lines, operating revenue zoomed to INR 2,416 Cr in the quarter ended June 2023 against INR 1,413.9 Cr in Q1 FY23.

Shares of Zomato closed 1.33% lower at INR 111.7 on the BSE on Thursday (October 19).