Target: ₹280
CMP: ₹234.10
We initiate coverage on Zomato with a BUY recommendation and a Target Price (TP) of Rs 280/share, implying an upside of 23% from the current levels. We are confident that Zomato’s expansion in the Quick Commerce sector is supported by a consistent enhancement in profitability and a notable reduction in losses within the hyperpure and quick commerce domains.
The rise in urbanisation presents a notable market potential for businesses, with evolving preferences and demands of the urban consumer base.
Zomato’s strategic implementation of the farm-to-fork concept, coupled with its robust network of restaurants, is poised to serve as a key differentiator in its B2B operations. This unique positioning is expected to exert a positive influence on the company’s revenue growth and overall top-line performance. Quick commerce, despite being in its nascent stage, presents a significant market opportunity with intense competition.
The huge market potential presents a great opportunity for Blinkit, given its market leadership. We believe that the leading position is likely to be strengthened on account of strong execution: faster expansion; wider assortment of SKUs and categories; higher ATUs; and synergies between Hyperpure (supply platform for restaurant) and Blinkit.