Summary
- Kotak, Nuvama, and Jefferies raised their price estimates for Zomato shares in their forecasts.
- Zomato’s shares closed at INR 149.45 on Friday, February 9, up 3.78% from the previous day’s finish of INR 144.
- Zomato’s financial success continued to grow during the quarter, as its net earnings reached INR 138 Cr, up 283% from INR 36 Cr in the September quarter before.
A day after the foodtech giant revealed a consolidated profit after tax (PAT) of INR 138 Cr in the December quarter (Q3) of the financial year 2023–24 (FY24), aided by a sharp growth in its quick commerce business, brokerage firms, including Jefferies, Nuvama, and Kotak, have increased the price target (PT) for Zomato stock.
The vast majority of brokerage houses have assigned the stock a “buy” rating. Securities anticipate that, as a result, the stocks will yield a total return of at least 15% in a year.
Investment banking company JM Financial kept its PT of the stock at INR 200, although Jefferies raised its estimate from INR 190 to INR 205.
On Friday, February 9, Zomato’s shares closed at INR 149.45, up 3.78% from the previous day’s finish.
The foodtech major reported its third consecutive profitable quarter, which prompted the brokerage to react. From INR 36 Cr in Q2 of FY24, their net profit increased by 283%. During the quarter, the firm generated INR 3,288 Cr from its operations, a 69% rise from INR 1,948 Cr in the same quarter last year.
The company’s speedy commerce vertical Blinkit has been a major contributor to its rapid growth. Its sales more than doubled from INR 301 Cr in Q3 FY23 to INR 644 Cr due to heightened festive demand.
Zomato stated that it is expected to reach adjusted EBITDA break-even for Blinkit by the June quarter of the 2025 fiscal year, if not earlier. Take-rate expansion, store operating leverage, and corporate level operating leverage, in the opinion of JM Financial, are crucial levers for near-term margin expansion to help Blinkit break even.
Furthermore, the company’s robust revenue growth estimate for the Blinkit segment is the primary basis for Kotak’s upgrade. The brokerage stated, “We think that the business’s margins can also improve in tandem with the core business.”
Nonetheless, the company’s food delivery segment continued to generate the majority of its overall operational income. Although sales for the vertical increased by 29% YoY to INR 2,205 Cr, the company was not satisfied with the consecutive growth.
Hyperpure, the company’s B2B division, led to an additional noteworthy uptick in sales. From INR 421 Cr to INR 859 Cr last year, its revenue more than doubled. To further expand this sector, the company is now establishing a plant to process value-added food supplies.
