Zomato’s decision to acquire Paytm’s entertainment and ticketing business for Rs 2,048 crore, will expand its presence in the “going-out” segment, according to analysts.
While BookMyShow, which is the market leader in the segment with a revenue base of Rs 800 crore, may continue to remain the leader, Zomato will be able to scale up its revenue from the “going-out” segment.
Analysts at Bernstein, Jefferies, and Nomura feel that Zomato will be able to expand its total addressable market (TAM), enhance growth, and compete against BookMyShow.
According to Elara Capital, the live events and the ticketing platform businesses can potentially report double-digit revenue growth for Zomato.
Under “going-out” vertical, Zomato currently offers dine-out table bookings and a few live ticketing events. With the current acquisition, Zomato plans to bring in ticket bookings for movies, sports and live events, under a one-stop destination, District (by Zomato) app.
Analysts at Emkay Global pointed out that the acquisition gives size and scale to Zomato’s “going out” business, acting as an additional growth engine over the medium-to-long term. Further, it also lends credence to the company’s aim of building a one-stop destination for “going-out” business.
Zomato management believes that “going-out” experiences will continue to see strong growth, with overall growth in lifestyle and consumption. Post-acquisition, the management estimates “going-out” gross order value (GOV) at over Rs 10,000 crore in FY26.
It expects the going-out business to operate near break-even on an adjusted Ebitda basis, while potentially delivering 4-5% adjusted Ebitda margin as a percentage of the GOV over the medium-to-long term.
Both Zomato’s and analysts’ confidence stems from multiple factors. One, the market for the live events segment is growing drastically. According to a Ficci report, the market size of India’s organised live event space was valued at Rs 8,800 crore as of CY23. Another report by Ernst and Young says India may see a live event ticketing CAGR of 17.6% in CY23-26. Within that, according to industry estimates, the online ticketing segment will grow at about 15-20% CAGR in the near-to-medium term.
Another key reason analysts are hopeful of the outcome of the deal is the past success of Zomato in quick commerce with the Blinkit acquisition, where Zomato turned the company around despite many early entrants such as Swiggy Instamart and Zepto.
Further, experts say that with this acquisition, Zomato can boost its average revenue per user (Arpu) by maintaining the same customer acquisition cost and encouraging users to transact across the platform for event bookings, movie tickets and more.
According to Motilal Oswal’s analysis, the take rate for Paytm’s entertainment business could be 12% and Zomato’s own going-out business (mainly restaurant bookings and some events) is 8%. “This is low due to the commoditized nature of restaurant bookings. Paytm’s offerings through its own app (movie tickets) and Paytm Insider (live events) already offer a higher blended take rate, driven by exclusive access to music shows and other live events,” it said.
Analysts said that, like Zomato’s food delivery segment, the ticketing business has low capital intensity, which promises a high return ratio once it reaches a steady state.