Shares of Zomato Ltd. gained over 2% on Thursday after it said it plans to buy the entertainment and ticketing business from Paytm parent One97 Communications Ltd.
Zomato will acquire the entertainment, sports, and events ticketing business—Insider and TicketNew—from One97 Communications for Rs 2,048 crore.
The acquisition is poised to aid Zomato in the long run, according to brokerages tracking the company. However, as of Thursday morning, the stock has only received one upgrade from Jefferies, as others have yet to price the acquisition.
The valuation looks compelling in the context of growth and margins, Jefferies said, adding that the low capital intensity promises a high return ratio in a steady state.
Shares of Zomato advanced as much as 2.7% to Rs 267 apiece before cooling off to trade 0.63% higher at Rs 261 by 9:25 a.m. The benchmark NSE Nifty 50 was trading 0.26% higher.
The stock has risen 162% in the last 12 months and 62% on a year-to-date basis. The total traded volume so far in the day stood at 3.8 times its 30-day average. The relative strength index was 64.
Twenty-five out of the 28 analysts tracking Zomato have a 'buy' rating on the stock, and three suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 2.5%.
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