Zomato, the popular food delivery platform, has been making waves in the stock market since its listing. After the company’s latest quarterly results, analysts have differing opinions about its future share price trajectory.
JM Financial, which views Zomato as its top pick within the listed internet coverage, expects the momentum to sustain. The market is currently capturing the value attributable to the food delivery business, but JM Financial believes that significant value unlocking is yet to happen in Blinkit, another segment of Zomato. The firm has set a revised target price of Rs 115 for the stock.
Nuvama, another brokerage, is also optimistic about Zomato’s prospects. The company’s strong growth in Gross Order Value (GOV) and revenue in Q1FY24, along with the guidance of more than 40% year-on-year growth in adjusted revenue for the next two years, underscores management’s confidence and provides much-needed visibility. Nuvama sets a target of Rs 110 for Zomato’s stock.
On the other hand, Nomura India is more cautious. While acknowledging Zomato’s growth during the summer holiday season and the IPL cricket tournament, the firm believes that sustaining high GOV growth and strong improvement in contribution margin (CM) of the core Food Delivery (FD) business for an extended period will remain challenging. They have increased their DCF-based target price from Rs 45 to Rs 60.
Motilal Oswal Securities is positive about Zomato’s reported EBITDA turning positive by the March quarter and envisions a 5% EBITDA margin in FY25. They value the business using a DCF methodology with a target of Rs 110, implying a 28% potential upside.
Overall, the price targets set by these brokerages range from Rs 60 to Rs 130, with each firm having its reasons based on their assessments of Zomato’s performance and future growth prospects. As investors, it is essential to carefully consider these varying views before making any decisions in the stock market.
