Food aggregator and delivery services platform Zomato Ltd is unlikely to spend big bucks on an acquisition at this juncture as the focus of the company is on improving its profitability metrics, analysts say.

A Bloomberg report recently said that the company had made an offer to acquire logistics start-up Bigfoot Retail Solutions, which operates the brand Shiprocket, for $2 billion.

Zomato denied the report saying that it was focused on its “existing businesses with no plans for any acquisition at this moment.”

Shiprocket provides logistics and fulfilment services to direct-to-consumer companies.

US investment bank Jefferies said in a note “... diversification seems very unlikely to us at this stage.” It observed that Zomato had been acquisitive in the past and it carried $1.4 billion on its books. With a growth mindset acquisitions on new lines of business could not be ruled out but right now the quick commerce business under Blinkit required management bandwidth and food delivery was still ramping up on profitability. “...we think management’s hands are full,” it added.

The company is expected to report a profit for the full year in FY24 marking the first time it achieves both a net profit and an operating profit. Despite consistently reporting losses in previous periods, it has maintained a steadily increasing revenue trajectory.

In the half year to September, the company reported a net profit of ₹38 crore compared to a loss a year ago. This was the second straight quarter of profit for the food delivery company. Its revenues were also higher than what the Street had estimated.

Blinkit is also showing rising traction with its Gross Order Value much larger than that of Zomato in some cities. The management is focused on expanding this business, with the addition of more stores.

A source, who has been associated with the company in the past, said that Shiprocket was a suitable fit for the company due to existing synergies. For one, Zomato has a stake in the company and second, they share common shareholders such as Temasek and Infoedge.

Prior to the Blinkit acquisition, Zomato initiated its involvement with the company by being an investor when it was known as Grofers.

But, said the source, an acquisition right away appeared unlikely because Zomato was still consolidating itself and would not like to ‘spend so much’.

The company, too, when responding to the news report said that it was making this clarification “given the large size of the deal mentioned in the news article.”

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