Friday, February 23, 2024

Zomato: Company turns from loss to profit, this stock will cross Rs 250, current price Rs 150

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Zomato Stock Price: The outlook of app-based food delivery company Zomato is continuously getting stronger. Brokerage houses are now going crazy over this stock which was once a headache for investors. Today the company’s stock has risen by about 4 percent to Rs 151, which is a record high for the stock. Profit of Zomato Limited, a platform for online delivery of food items (Zomato Profit It was Rs 138 crore in December quarter. Whereas in the same quarter of the last financial year, the company had suffered a loss of Rs 347 crore. After the company’s results, the sentiment regarding the stock has strengthened further.

The company is running in profit

When the IPO of Zomato (Food Delivery Platform) came, there was no clarity regarding the profitability of the company. Due to which the share had fallen far below its IPO price. But now the company’s business is continuously getting stronger. The company is in profit. Due to this, there has been a strong rise in the stock for the last few months. Zomato’s shares have strengthened by 169 percent in one year. Compared to the IPO price of Rs 70, it has become more than 100 percent stronger.

Brokerage ratings and targets

Motilal Oswal

Rating: Buy
Target price: Rs 170

HSBC

Rating: Buy
Target price: Rs 163

Jefferies

Rating: Buy
Target price: Rs 250

Bernstein

Rating: Outperform
Target price: Rs 180

morgan stanley

Rating: Overweight
Target price: Rs 150

What does the brokerage house have to say?

According to brokerage house Motilal Oswal, the food delivery business in India is still in its initial stage, with huge potential for growth. With a dominant market share and strong growth in the food delivery business and Hyperpure, we expect Zomato to report a strong 38 per cent CAGR growth in revenue in FY24-26. After positive margin levels in the December quarter, we estimate the company to achieve 4.5% and 10.0% EBITDA margins in FY25E and FY26E. The brokerage has valued the business using DCF method assuming 5.0% terminal growth rate and 11.5% cost of capital. It is advised to invest in the share with a target of Rs 170.

Blinkit’s growth got support

According to the brokerage, Zomato has reported another good quarter with a revenue of Rs 3280 crore. There has been 15% QoQ and 69% YoY growth. This is much stronger than brokerage estimates. Growth was supported by Blinkit, which grew 27% QoQ, while food delivery revenue grew 10% QoQ. This is driven by higher take rates (20.1%, +70bp QoQ). Despite ongoing headwinds in the food industry, delivery GOV grew 6.3% QoQ (including 100bp adverse impact from lower delivery charges).

Management maintained its long-term revenue growth guidance at 40%+ annually, but raised it to 50%+ annually for the near term. Continued strength in Blinkit will more than offset the slow growth in food delivery (20% + YoY GOV growth), which is a moderation from the 3Q growth of 27% YoY.

(Disclaimer: The advice to invest in stocks has been given by the brokerage house. These are not the personal views of digitnews. There are risks in the market, so take expert opinion before investing.)

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