After Zomato’s high-profile acquisition of Paytm Insider, many industry analysts have questioned the INR 2,048 Cr deal size and the revenue multiple paid by Zomato
Analysts believe a lot depends on Zomato’s execution strategy and its investment appetite as it looks to take on Reliance-backed BookMyShow in the live events and movie ticketing space
However, competing against ticketing giant BookMyShow would also require Zomato to invest in events IP and manage live events, where it will be on the back foot in comparison to the competition
The Zomato and Paytm Insider deal is definitely one of the most high profile acquisitions in India. But the question that many are asking is: did Zomato overvalue Paytm Insider in the INR 2,048 Cr deal.Karan Taurani, SVP at Elara Capital, who closely watches the media and consumer tech market believes that Paytm Insider was certainly given a premium with regards to the valuation, but he also noted that Zomato’s history of turning around businesses can actually deliver good ROI for the group in the medium to long term. Nishant Kini, founder of Bengaluru-based branding and events agency The Nishé & Co, added that the price seems particularly high considering Paytm Insider had a stronger presence in Tier 1, 2 towns. On the other hand, Zomato’s plan to add Paytm Insider to its District going-out vertical seems to be centred around metros. One source privy to the events operations at BMS said that the company bought exclusive rights to host Sunburn Festival for Hundreds of Crores a few years ago, and this has mostly been a profitable investment. “Movie ticketing has seen a slump in the wake of OTT entertainment, but live event ticket pricing has surged, and this does pose a challenge in attracting users beyond the affluent class. Hence platforms are looking to buy out large scale events knowing exactly what kind of consumer to attract,” added The Nishé & Co’s Kini.“Much will depend on how the two entities are brought together and the users on Paytm and Zomato given some over the top discounts on highly priced tickets to these big events which could get them a breakthrough,” the founder of an event management company told us.
Zomato and its CEO Deepinder Goyal have been in this situation before, and had to answer a similar question two years ago.