Zomato shares gained more than 2 percent in early trading on March 16, i.e. today. The news of Moneycontrol has shown its effect on this stock today. It is worth noting that Moneycontrol had already informed that Zomato has entered into an all-stock deal for the merger of online grocery portal Blinkit with itself.
Zomato has told in the information given to the exchange that it will give a loan of $ 150 million to Blinkit to meet its capital requirements. This loan will be given in one or more installments.
It is worth noting that Blinkit was formerly known as Grofers. Zomato has entrusted the senior management of the company to decide the terms and conditions of the loan. This loan will be given at an interest of 12% per annum or more, with a tenure of not more than one year. This loan will help Blinkit meet its capital requirements in the short-term.
Let us tell you that Blinkit has come under tremendous pressure due to increasing competition in the quick service grocery format. The company is facing heavy competition from Zepto and Swiggy’s Instamart, due to which the company has had to lay off all its employees, close many stores and payment of some vendors has also been delayed.
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Brokerage firm HSBC Securities India of India says that with the possible merger of Blinkit with Zomato, this online grocer will get access to Zomato’s customers while Zomato will also be able to spread its feet in the online grocery market which is a huge market.
Similarly, brokerage firm BofA Securities has said that Zomato’s deal with Blinkit will prove to be negative in the near term. BofA Securities believes that the large capital investment by Zomato in Blinkit may prove to be a loss-making deal for Zomato. Zomato’s decision also goes against its announcement that it would focus on one of its core businesses for the next few years.
Let us tell you that in 2022, there has been a huge beating of Zomato’s shares. Notably, all the internet and tech-based companies that were listed recently had very high valuations and most of them are making losses. Apart from this, the possibility of hike in interest rates by central banks across the world has also put pressure on these stocks, due to which these new-age tech-based stocks, including Zomato, have been seen to be strongly beaten.
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