Zomato has decided not to back down in a blinking contest with EY regarding Blinkit (formerly called Grofers). The food delivery platform's board rejected the global accounting agency's latest valuation report, which lowered its share prices after it acquired the quick commerce firm in June 2021. 

Zomato stated that the original EY report on June 24, which pinned its share price at Rs 70.76, is in absolute and complete compliance with all provisions of applicable laws. However, it did not disclose the modified lower share price suggested by EY. 

The latter felt that the valuation ought to be lower based on its latest evaluation methodologies. Zomato had sought this second report from the accounting company after being directed by the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). 

Prevailing Despite Pressure

Zomato's board recently gave the green signal for the acquisition of Blinkit. As part of an all-stock buyout deal, the food tech company valued the grocery delivery platform at $568 million. 

Over the past few weeks, Zomato's share prices have steadily declined, losing more than 60 per cent of their value since its stellar stock market listing in July 2021. One reason for this was the ending of the one-year lock-in period for pre-IPO buyers leading to institutional investors offloading their stakes. 

Recently Moore Strategic Ventures sold its entire stake, amounting to 4.25 crore shares, at an average price of Rs 44. Earlier this week, Uber divested its 7.78% stake through two mega block deals. Fidelity bought the ride-hailing app's 5.44 crore shares at an average price of Rs 50.26, while ICICI Prudential bought 4.5 crore shares at Rs 50.25 per share. 

Zomato's decision to acquire Blinkit last year also came under fire from various quarters since the quick delivery company reported huge losses in 2021 and is yet to turn profitable. Zomato, which has already invested $150 million in it, has now lowered its total investment guidance from $400 million to $320 million. 

Incidentally, Blinkit has registered improvement in its performance metrics according to Zomato's June quarterly financial reports.While reporting the quarterly earnings, Zomato's MD and CEO Deepinder Goyal said that in six months the Blinkit business has scaled to 20 per cent of Zomato’s food delivery gross operating value (GOV), while being present in less than 15 cities.

The company now expects the quick delivery start-up's orders to touch 8.3 million by July 2022-end, up from 7.9 million in May 2022. Further, Zomato estimates that its monthly transacting customers base will go up to 2.5 million by July end from 2.3 million in May.