Shares of Zomato gained 2.30 per cent to ₹66.70 on the BSE on Thursday. The stock has remained resilient and rallied over 5 per cent after Alibaba-led Alipay Singapore Holding, on Wednesday, sold 26.29 crore shares (3.07 per cent stake) of the company. The shares were sold at an average price of ₹62 apiece.
However, analysts see valuation in the company.
“Zomato, with its strong footprint across 23 countries, is well placed to benefit from the immense potential in the food delivery industry,” said Motilal Oswal Financial.
Blinkit integration post-acquisition went well and it has not lost any market share in the last quarter, the brokerage, which recommended a Buy on Zomato with a price target of ₹86, said.
According to JM Financial, growth concerns for the food delivery business seem more severe than anticipation, especially from a near-term perspective.
Entry point
“However, a near-term growth blip could provide an interesting entry point for investors to accumulate positions and partake in the long-term value-creation opportunity. We continue to believe that there is immense potential for the food delivery industry to enlarge its consumer base and grow meaningfully bigger over time.” JM Financial reitereated its Buy stance on the stock, but reduced the target price to ₹125, from ₹130 earlier.
Jefferies, in a recent report, maintained a Buy on Zomato with a target price of ₹100. While the company’s guidance on food delivery break-even by September 2023 stays, the management intends to balance growth and profitability and will not compromise on the former, it said.
“Blinkit growth outlook also is positive and integration has been smooth. We incorporate Blinkit in our forecasts — maintain Buy with high-conviction,” it added.