‘ORDER IN’ or ‘GO OUT’, Zomato Will Make Money

In a move that might make you double-tap your news feed, Zomato has decided to go on a shopping spree and picked up Paytm’s movie, sports, and live-events ticketing business for a whopping Rs 2,048 crore (or $244 million, for those of us who think in dollars).This acquisition will complement Zomato's dining-out unit, which accounts for just about 2% of its revenues.

In case you didn’t know, Zomato’s event booking and dining-out units are now living under the same roof called 'District'.They’re planning to wrap up this deal faster than you can say “extra cheese” and expect to transition everyone from the Paytm app to their shiny new District app in the next 12 months. 

Meanwhile, Paytm has been trying to pick up the pieces of its affiliate, Paytm Payments Bank following a regulatory clampdown from RBI. To get back on track, they’ve decided to sell off some of their side gigs, which include this ticketing business. Think of it like a yard sale, but with a billion-dollar price tag.

Nobody questions Deepinder Goyal’s ability to turn around an acquisition as Blinkit has delivered well for the stock. But, the issue here is capital allocation. When there is a large opportunity like quick commerce and you are in a high interest-rate environment, does it make sense to buy a loss-making company?

At the end of the day, it is not a diagnostics lab that Zomato is acquiring… What it is doing is trying to get a bigger wallet share of the user’s lifestyle spends which is an area the company already plays in,

Zomato will bring an element of discoverability to the movie ticketing and events business—something that is currently missing. Typically, users first log on to a ticketing platform to purchase tickets for pre-decided events, without spending any time exploring what else is on offer. More importantly, food and quick commerce have more frequency of use as opposed to a vanilla ticketing platform that you might visit only on the weekends.

Paytm is putting that cash to good use, focusing on payments and financial services while they try to rebuild their empire.Their stock popped up by 5.47%, because who doesn’t love a good payday?

So, there you have it: Zomato is branching out from delivering your dinner to delivering your entertainment, and Paytm is doing a little spring cleaning of its own. It’s a win-win if you’re a fan of either apps—or just love watching corporate drama unfold!