Buy or Sell Zomato Share :The shares of food delivery online platform Zomato have seen a significant rise this year. This year the stock has gained 117 percent, that is, in less than 11 months this stock has more than doubled the investors’ money. At the same time, in the coming 3 years the stock price may double again from the current price. Brokerage house Morgan Stanley is positive on Zomato and has given a high target price while advising to buy.
Brokerage house Morgan Stanley believes that in the bull case the share price can double from the current price in less than the next 3 years. Whereas in the base case the shares can double in 5 years. At present, the brokerage has kept the target price of the share at Rs 355 for the near term. This is 32 percent more than the current price of Rs 270. The brokerage house has listed some special reasons due to which the fundamentals of Zomato appear strong and this new age stock can show huge growth in the coming days.
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Which 7 factors are supporting Zomato
1. Quick commerce market may accelerate due to category expansion and wallet share gains.
2. Despite high competitive intensity in the near term, we expect Zomato to remain the market leader and capture a greater share of the industry profit pool.
3. It is expected that Zomato will maintain its 40% market share despite increasing competition.
4. The stock in the Quick Commerce business is priced at Rs 120/share, which we think is conservative.
5. Zomato’s strong balance sheet and ability to withstand competitive pressures puts it ahead of its competitors.
6. The company’s food distribution business also remains strong, based on a loyal customer base and solid operating metrics.
7. The company’s margin may remain at 2.2% till F2027 and 5.1% till F2031. Which indicates an annual profit pool of around 1 billion US dollars for this business.
(Source: Morgan Stanley)
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Another recent report on the stock
Brokerage house Motilal had given Buy rating on Zomato in a recent report and has kept the target price at Rs 330. The brokerage says that while the company’s food delivery business is stable, Blinkit provides a generational opportunity to participate in the disruption of industries like retail, grocery and e-commerce. The brokerage’s estimates are largely unchanged, as growth in Blinkit GO as a result of dark store network expansion has been offset by a decline in profitability due to increased capex and investments. It is estimated that Zomato’s PAT margin may be 4.7%, 8.6% and 12.9% in FY25, FY26 and FY27.
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How were the company’s quarterly results?
Zomato’s profit (PAT) has increased almost 5 times on annual basis to Rs 176 crore in the September quarter, whereas the profit in the same quarter a year ago was Rs 36 crore. At the same time, PAT has decreased by 30 percent as compared to Rs 253 crore in the previous June quarter. The company’s revenue increased by 69 percent on an annual basis to Rs 4799 crore, which was Rs 2848 crore in the same quarter a year ago. Revenue in the June quarter was Rs 4206 crore.
(Disclaimer: The view or advice on the share is given by the brokerage house. These are not the personal views of Financial Express. There are risks in the market, so take expert opinion before investing.)
