Shares of Zomato gained over 3 per cent on Wednesday after the company posted its consolidated net profit at ₹176 crore in the second quarter of FY25 as against ₹36 crore in the corresponding quarter in the previous fiscal. Brokerages have been bullish on Zomato as it continues to push the paddle of growth across its business.
Zomato’s board has also approved raising up to ₹8,500 crore via QIP. The food delivery platform today tapped its platform fee ahead of the festive season, according to an app notification.
Domestic brokerage Motilal Oswal sees 28 per cent upside from the current market price. The brokerage has kept its estimates largely unchanged, as the increase in Blinkit gross order value (GOV) due to the dark store network expansion is offset by decreased profitability owing to increased capex and investments.
Motilal added in its report that the food delivery business is stable, and Blinkit offers a generational opportunity to participate in disrupting industries such as retail, grocery and e-commerce. It has reiterated ‘buy’ rating at a target price of ₹330.
HSBC and UBS have maintained ‘buy’ ratings on Zomato at a target price of ₹330 and ₹320, respectively. While CLSA has assigned ‘outperform’ rating at a target price of ₹370.
Nuvama Institutional Equities emphasised that Zomato’s strong Q2 results were above estimates and that its growth delivery continues to surprise. Nuvama has retained buy rating at an increased target price of ₹325 from ₹285 earlier. “We expect Blinkit dark store addition to be faster than initially expected—hence growth shall be even faster while profitability would be delayed due to higher upfront cost thereof, which, in our view, is the right strategy in a cut-throat quick commerce market,” it said.
Elara Capital expects growth acceleration in H2, backed by the festive season. The brokerage highlighted Zomato’s food delivery or quick commerce GOV grew 21.4 or 122.2 per cent y-o-y and its Hypercure and Going Out segments saw a respite in profitability. Elara has reiterated buy rating at a target price of ₹320 and stated that better execution and potential QIP inflows place Zomato in a dominant position.
Analysts of Emkay Global stated that the strong performance of the Blinkit, Hyperpure, and Going Out segments drove Zomato’s impressive quarter, while food delivery continued on its steady path. Emkay has maintained a ‘buy’ call at a target price of ₹310.
ICICI Securities and JM Financial have affirmed that Zomato remains their top pick in the internet space and maintained buy ratings at a target price of ₹300 each.
“Zomato remains one of the fastest growing consumption names with significant room for margin expansion across all its business segments. Unless there is irrational rise in competitive intensity in Quick Commerce, we expect the company to deliver very strong earnings growth,” JM Financial report read.
JM Financial opined that Zomato’s fundraising move could be used as a war chest to deter competitors from aggressive discounting/incentives.
Meanwhile, Macquarie has maintained an underperform rating on the stock at a target price of ₹100.
Shares of Zomato closed at ₹264.15, higher by 3.10 per cent on the BSE.
