Zomato After the company reported profits for the first time, several brokerage firms witnessed a surge in the target price of Zomato Limited’s shares. During this time, many brokerage firms maintained their ratings on the stock.
Following the company’s first-time profitability, Zomato Limited’s shares saw a wave of increase in target prices by various brokerage firms, although many of them maintained their ratings on the stock.
Motilal Oswal Securities expects the stock’s target price to be 28% higher than the current market value at INR 110 per share, while JM Financial anticipates the stock to increase by 37% to INR 115 per share in the next 12 months. City has raised its target price from INR 84 to INR 115. Previously, Morgan Stanley also increased its target price from INR 85 to INR 115.
Goldman Sachs expects the target price to rise from INR 82 to INR 100, while Jefferies India expects it to reach INR 130. Kotak expects the stock’s price to reach INR 105, up from its previous target of INR 95 in the next year. Meanwhile, HSBC has raised its target price by 20% to INR 102.
On August 3rd, Zomato reported a net profit of INR 200 crores and registered a revenue of INR 2,416 crores for the first quarter of the current financial year, which is 70.9% higher compared to the previous year due to lower inflation and increased demand for the food distribution platform. Loyalty program.
The description of Zomato’s earnings by brokerage firm JM Financial as “stellar” barely captures the actual magnitude of the achievement. With their previous belief that the street estimates were overly conservative, Zomato’s earnings exceeded expectations and outperformed any estimates. It has consistently maintained its top position in the covered internet coverage list.
“Based on the results and guidance, with good security margins, it appears that Zomato is a rare play on both growth and profitability. However, since the results of the March quarter, the stock has surged by 35%, and we expect the momentum to continue,” said JM Financial.
According to Jefferies, Zomato’s journey since its IPO has been marked by significant ups and downs. However, the company has crossed its self-set milestones, successfully IPO’d and becoming a positive example for FIIs and DIIs alike. This success eliminates any concern about Zomato’s ability to generate “respectable” profits.
In addition, the impressive performance of the results management team and its implementation capabilities augur well for Blinkit. Blinkit is a segment that many investors had previously underestimated or even viewed negatively. As a result of these positive developments, Jefferies has raised its EBITDA estimates significantly.
Zomato’s Gross Order Value (GOV) in the food delivery segment increased by 11.4% to INR 7,318 crores, with active monthly transacting users growing by 5.4% to 17.5 million. Blinkit saw its GOV increase by approximately 5% to INR 2,140 crores, while its Average Order Value (AOV) increased to INR 582, representing an 11.5% growth on a quarterly basis.
“We remain positive and expect a long-term 15% GOV growth in food delivery, but we are seeing a significant acceleration from Blinkit, which can become as large as the FD business itself,” HSBC said in its latest note.
Brokerage firms Nomura Research, Dolat, and Macquarie Research have cut their target prices. Nomura expects a target price of INR 60, a 37% reduction from the previous target of INR 87, while Dolat has reduced its target price by 25% to INR 65. Macquarie, on the other hand, maintained its underperform rating and kept its target price at INR 55, aligning it with the current market price.
Zomato has provided an outlook that is significant, considering the growth trajectory of the food delivery and blinkit businesses. The potential to generate a “respectable” profit sets aside any concerns about Zomato’s ability to achieve this feat, which anyone could have foreseen or even surpassed the estimates. This success has elevated Zomato to the top position in its covered internet coverage list.