Jefferies’ Chris Wood adds Zomato to India portfolio; HDFC Life makes exit

Jefferies’ Global Head of Equity Strategy Christopher Wood has picked food delivery app Zomato for his India long-only portfolio. The weight of the stock will be 4%. On the other hand, Wood has removed HDFC Life Insurance from the same.

Zomato has also been added to the global long-only equity portfolio, which will be paid for by shaving off the investments in JD.com and Alibaba by 2% points each, according to a Jefferies’ May edition of ‘Greed & Fear’.

In his Asia ex-Japan long-only portfolio, Zomato and SBI Life Insurance have found a place as investments in HDFC Life Insurance and Standard Chartered make an exit, the Jefferies report said.

Wood has also added weight by 2% in REC and the increase in weight comes at the expense of Oil & Natural Gas Corporation.

The move comes after the ace investor picked-up private lender Axis Bank and mid-cap stock Thermax Limited for his India Long-only portfolio. The weight of stocks is 5% and 6%, respectively.The investments in AIA Group, Bank Central Asia, Bajaj Finance, Godrej Properties and Macrotech Developers will also all be increased by one percentage point each, the Greed & Fear report stated.

Zomato is back in focus of many top brokerages after the food delivery platform posted its Q4FY23 earnings where it narrowed its year-on-year and sequential losses.

Listed below are brokerage views:

Goldman Sachs: Buy | Target: Rs 82
The foreign brokerage has a ‘buy’ stance on Zomato for a price target of Rs 82. The company Q4 earnings were better than Goldman Sachs’ expectations on several metrics. The brokerage noted improving growth and profit outlook.

Emkay: Buy | Target: Rs 90
We maintain ‘buy’ on Zomato with TP of Rs 90/share. The superior Q4 performance bolsters our belief in Zomato’s ability to execute & deliver profitable growth. Improvement in consumer sentiment is expected to drive GOV/MTU growth.

Nomura: Reduce | Target: Rs 45
Nomura maintains a ‘reduce’ on Zomato shares with a price target of Rs 45, implying a 30% downside. We factor in a weaker FD business outlook and stronger Q-commerce growth, and higher CM margin in food delivery leading to a lower EBITDA loss in FY24F.

Our DCF-based target price of Rs 45 remains unchanged. Achieving high GOV growth and strong CM improvement in core FD business remain challenging, in our view. Key risks are stronger-than-expected GOV growth in FD business and quicker break-even in Q-commerce.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)