Zomato, the popular food delivery and tech platform, has recently made headlines as reports surface regarding a hike in its platform fees and the potential impact of GST on delivery charges. In response to these developments, foreign brokerage CLSA has provided valuable insights, offering a target price and outlining potential strategies to navigate the challenges.
According to CLSA, Zomato has increased its platform fees from Rs 3 to Rs 4 in key markets. This move is believed to offset, at least partially, the impact of GST on delivery charges. CLSA suggests that Zomato’s temporary hike in platform fees to Rs 9 on December 31, 2023, indicates a dynamic approach to handling this crucial component.
In the face of potential GST on delivery charges, CLSA envisions Zomato employing various strategies to pass on the burden to consumers. This includes a combination of increased commission rates, higher Average Order Values (AOV) through menu price adjustments, or higher platform fees.
The foreign brokerage proposes a target of Rs 168 on Zomato, indicating a substantial 31% potential upside over the current stock price. CLSA emphasizes that alternatives, or a combination of measures, could help mitigate the impact of GST on delivery charges.
