Nomura India has outlined potential risks for Zomato following its acquisition of Paytm’s entertainment ticketing business. As per the Business today, the key challenges include the smooth integration of the newly acquired businesses into Zomato’s upcoming ‘District’ app and the initial cash burn required to incentivize users to migrate from Paytm’s platform. Unlike the Blinkit acquisition, where Zomato’s management was familiar with the team, the Paytm team remains an unknown entity, adding to the uncertainty.
In the near term, Nomura believes that Zomato’s share price will largely be driven by continued growth momentum in the quick commerce sector. The brokerage projects a 100% compounded annual growth in gross merchandise value (GOV) for this segment over FY24-26, with the food delivery business expected to maintain a steady 20-25% annual growth. However, key risks include a capital allocation of $1.5 billion and potential slowing growth in both the food delivery and quick commerce businesses. Nomura has set a target price of ₹280 for Zomato stock, citing these factors.
