Anushruti Singh
In a significant move that signals its ambition to dominate the going-out segment, Zomato has announced the acquisition of Paytm’s entertainment ticketing business for a cash consideration of approximately ₹20.5 billion. This strategic acquisition is set to bolster Zomato’s presence in the entertainment and events space, adding substantial size and scale to its going-out business. With this acquisition, Zomato is not just expanding its service portfolio but also laying down the foundation for long-term growth in a rapidly evolving market. Here’s a comprehensive analysis by analysts at Emkay Global Financial Services on how this acquisition skyrockets Zomato’s growth.
Why this acquisition matters
Zomato’s acquisition of Paytm’s ticketing business marks a critical expansion into the lifestyle and entertainment sector. By integrating movie, sports, and events ticketing into its ecosystem, Zomato aims to build a one-stop destination for all going-out activities, enhancing its value proposition to customers.
This move is more than just an addition to Zomato’s existing services. It’s a strategic leap that aligns with the company’s vision of creating a comprehensive going-out platform, which will soon be complemented by the launch of the new ‘District’ app. This app will serve as a hub for booking everything from dining reservations to live entertainment, positioning Zomato as a leading player in the lifestyle and entertainment domain.
The financial impact
Zomato’s financial trajectory has been impressive, with substantial growth projected over the next few years. The entertainment ticketing business acquired from Paytm is expected to contribute significantly to Zomato’s revenue stream. In FY24, the acquired business generated a GOV of over ₹20 billion, reflecting a 29% year-on-year growth, and recorded revenue of ₹3 billion with an adjusted EBITDA of ₹0.3 billion.
Looking ahead, Zomato’s management projects that the going-out segment will generate a GOV of over ₹100 billion by FY26. With a strong execution track record, Zomato is well-positioned to leverage this acquisition to achieve near break-even on an adjusted EBITDA basis, while targeting a 4-5% adjusted EBITDAM as a percentage of GOV over the medium-to-long term.
The strategic advantage
This acquisition is not just about numbers—it’s about strategic advantage. By integrating Paytm’s entertainment ticketing business, Zomato can now offer a seamless experience for users looking to dine out, watch a movie, or attend a live event. This all-encompassing approach is expected to drive customer engagement and loyalty, further solidifying Zomato’s market position.
Moreover, the acquisition will allow Zomato to tap into a new customer base and cross-sell its other services, creating a robust ecosystem that caters to a wide range of consumer needs. With the ‘District’ app poised for launch, Zomato is on track to revolutionize the way Indians plan their going-out experiences.
Zomato’s growth trajectory
Zomato’s growth story has been nothing short of remarkable. The company’s revenue is expected to nearly double by FY27, reaching ₹346,425 million, up from ₹121,140 million in FY24. This rapid growth is underpinned by a strong EBITDA performance, with margins expected to improve significantly from 0.3% in FY24 to 14.9% by FY27.
The company’s adjusted PAT is also set to skyrocket, growing from ₹3,510 million in FY24 to ₹43,899 million by FY27. These figures underscore Zomato’s ability to not only scale its operations but also enhance profitability, making it a formidable player in the Indian market.
Zomato’s acquisition of Paytm’s entertainment ticketing business is a bold move that sets the stage for sustained growth and innovation. By expanding its going-out segment and launching the new ‘District’ app, Zomato is poised to become the go-to platform for all lifestyle and entertainment needs. As the company continues to execute its strategic vision, Zomato’s growth trajectory is set to soar, delivering value to both customers and shareholders alike.
With this acquisition, Zomato is not just adding another feather to its cap—it’s redefining the future of going-out experiences in India.
