Zomato's Stellar Q2 Results Propel Shares To 52-Week High,

Zomato’s stock experienced a significant surge of approximately 5 percent, reaching a 52-week high of Rs 121.90 during the opening trade on November 6. This uptick in share value can be attributed to the company’s impressive second consecutive profitable quarter in the July-September period, which garnered positive attention from various brokerages. As a result, several brokerages raised their price targets for Zomato’s stock.

As of 09:28 a.m., the Company’s shares were trading nearly 2 percent higher at Rs 118.60 on the NSE. Notably, on November 3, the company’s shares had already witnessed an 8.3 percent increase on the NSE following the announcement of its Q2 results.

Zomato reported a net profit of Rs 36 crore, accompanied by a 71 percent year-on-year growth in revenue, reaching Rs 2,848 crore. This marks a significant turnaround from the previous year, during which the company had reported a net loss of Rs 302 crore and revenue of Rs 1,661 crore. These positive results are particularly noteworthy in the current economic climate, characterized by inflation and subdued demand within the e-commerce sector.

Nuvama Institutional Equities, raising its price target for the Company’s stock by over 27 percent to Rs 140, highlighted that the company’s revenue growth exceeded expectations, with all of its businesses continuing to thrive.

The firm stated, “Strong growth across business gives us confidence in the Company’s ability to maintain its lead in food delivery as well as gain market share in quick commerce,” while maintaining its “buy” recommendation on the stock.

Emphasizing the growth over profitability approach, the Company anticipates a moderate sequential gross order value (GOV) growth in food delivery for the next quarter, which should translate to approximately a 25-30 percent year-on-year increase.

HSBC, also raising its price target to Rs 140 while maintaining a “buy” rating, expressed optimism regarding the Company’s guidance for the next quarter. The firm remains bullish on Zomato’s long-term prospects, particularly in its quick commerce business.

Jefferies, in its assessment, pointed out that the Company’s accelerated GOV growth effectively addresses a key concern for investors, specifically regarding monthly transacting users (MTU) and frequency. The brokerage maintained a “buy” rating on the stock with a price target of Rs 165.

With a dominant market share and robust growth in the food delivery business and Hyperpure, Zomato is projected to report a strong 53 percent adjusted revenue compounded annual growth rate (CAGR) between FY23 and 25, according to Motilal Oswal Financial Services.

The firm stated, “We now estimate Zomato to turn positive on reported EBITDA by 3QFY24 (earlier 4QFY24) and deliver 4.1 percent EBITDA margin in FY25,” and maintained a “buy” recommendation on the stock with a price target of Rs 135.

Morgan Stanley commended Zomato’s solid performance in the September quarter, considering it as a testament to the effectiveness of the company’s strategic execution. However, the brokerage also acknowledged potential upside risk to Zomato’s FY24 revenue following the strong Q2 results. Morgan Stanley maintained an “overweight” rating on the stock with a price target of Rs 125.

Disclaimer: The views and investment tips expressed by investment experts on Dristaank.com are their own and not those of the website or its management. Dristaank.com advises users to check with certified experts before making any investment decisions.