Jefferies maintains ‘Buy’ on Zomato, sees 32% upside amid speculations on Shiprocket deal

Jefferies maintained a buy call for Zomato with target price of Rs 165. The report says that speculations surrounding a potential deal with Shiprocket, although Jefferies expresses skepticism about the likelihood of such an agreement. The company has reportedly denied any ongoing negotiations.

Zomato holds a 5% stake in Shiprocket following an investment made in 2021, and Jefferies attributes a low probability to the possibility of a deal at this stage. The report suggests that the management’s hands are currently full with Quick Commerce initiatives, contributing to the skepticism regarding a potential Shiprocket deal.

Shiprocket, a B2B logistics technology startup, specializes in delivering shipping and fulfillment services to direct-to-consumer (D2C) brands and omnichannel sellers operating in diverse categories, including apparel, electronics, beauty and personal care, and grocery.

The platform offers a comprehensive suite of services, encompassing discovery, order management, warehouse and fulfillment solutions, shipping services, order tracking, and efficient returns processing.

Prior to Zomato’s official clarification, a Jefferies report indicated that the likelihood of the Shiprocket deal materializing is low. Notably, Zomato currently holds a 5 percent stake in Shiprocket, a position acquired through an investment in 2021.

The report suggests that if the acquisition were to proceed, Zomato’s shares might experience a period of weakness. This is attributed to the perceived lack of direct relevance, despite potential underlying connections between the acquisition and Zomato’s existing ventures in quick commerce and hyperpure.