Zomato Share Price Highlights 25 June 2024: Brokerages bullish on Zomato with ‘buy’ rating, stock gains 2%

“During Tuesday’s market session, Zomato stock witnessed around 1% surge in intraday and is currently trading at a market price of Rs. 201. Notably, the stock has delivered around 168.27% in 1 year, making it a lucrative bet for many. The company’s PE ratio stands at 488.12 against the average sector PE of 19.04, while its high PB ratio of 8.39 suggests that investors are willing to pay more than the book value of companies operating in this space. Then again, the sector has not offered any dividend yield and its ROE stands at -4.99 %, raising concerns about profitability. However, Zomato’s revenue is derived from various product categories, with delivery revenue contributing the largest share at 48.26% and the remainder from hyperpure, quick commerce segment, dine-out options, and others.

As per my technical analysis, Zomato was trading with an RSI of 64 on the daily, 70 on the weekly, and 73 on the monthly timeframe, suggesting a potential correction on the higher frames. It was also trading nearly 3% away from its record high and could continue its pullback move. This could present the market with new buying opportunities. So, those interested may consider the buying range of Rs. 192-194 for a target price of Rs. 203-215. They may hold this stock for 7-20 days while closely sticking to a stop loss of Rs. 188 to minimize loss.” Suggested VLA Ambala, SEBI Registered Research Analyst and Co-Founder of Stock Market Today

A report on Zomato highlighted that quick commerce GOV has grown much ahead of the e-commerce industry, led by geographical penetration. now 487 active stores across 26 cities; with Zomato’s Blinkit having 433 stores at the end of Dec-23 and saw SKU expansion (over 9,500 items now listed on the platform). It has also highlighted that unit economics continue to improve aided by larger basket sizes, expanded user base, and improved operational efficiency. Similarly, Blinkit has shown sharp improvement across metrics over the last few quarters, with the overall industry now finding favourable traction.

Indian benchmark indices, Sensex and Nifty, opened higher on Tuesday, maintaining a narrow range as investors await fresh triggers with indexes near all-time highs. NSE nifty was up by 0.21 per cent or 49 to 23,587 points, while the BSE Sensex was at 77,583 up by 0.31 per cent or 242 points.

JM Financial emphasised in its report that Swiggy lagged behind Zomato both in terms of growth as well as profitability on a relative basis, while on an absolute basis, the former’s numbers were impressive.

“While Swiggy has confidentially filed its pre-DRHP, we believe a successful public listing largely hinges on the management’s ability to demonstrate a clear path to adjusted EBITDA break-even at a consolidated level and arrest market share losses in food delivery as well as quick commerce business,” the brokerage added.

Shares of Zomato climbed close to 2 per cent on Tuesday’s early trade. Brokerages have been bullish on the stock following Prosus’ report on Swiggy, which disclosed that the latter’s GOV revenue was up 26 per cent in the last calendar year, similar to Zomato.

Domestic brokerage Emkay Global stated that Zomato’s higher growth has been aided by the superior performance in quick commerce.

“Data reveals that Zomato has further expanded its market share across both verticals, the food delivery and quick commerce segments. Its market share has touched almost 57%.in food delivery segments. Technically the charts of Zomato are showing good strength and its attempting to take out it’s ATH at 207. The stock price have good potential to do 225-240 in short term.” says Vinod Jhaveri, independent analyst, Pure Technicals.

CLSA on Zomato

Buy Call, Target Rs 248

Prosus’ Annual Report For FY24 Shows Swiggy’s Overall GOV Grew By 26% YoY

Overall gross order value (GOV) Includes Food Delivery + Quick-Commerce

Swiggy’s Overall GOV Growth Lagged Co’s Corresponding Growth Of 36% During The Same Period

Swiggy’s Overall Rev Growth Was 24% YoY While Zomato’s Adj Rev Growth Was 55.9% YoY

Swiggy’s Trading Losses Reduced To $158 m During FY24

Co Reported A Positive EBITDA Of $5 m During FY24

UBS on Zomato

Buy, Target Rs 250

Swiggy’s GOV Grew 26% YoY As Of Dec’23 With 104 m Users Per Prosus

Swiggy’s Food Delivery GOV Grew ‘Double Digits’ With Improved Advertising & Platform Fees

Q-Com Saw ‘Fast’ GOV Growth With 487 Darkstores In 26 Cities For Swiggy

In Swiggy’s Comparison, Co’s GOV Grew 37% In FY24 & It Had 530 Darkstores As Of Mar’24

Zomato reported a turnaround in its financial performance for FY23-24, achieving revenue of ₹121,140 million, up from ₹70,792 million in the previous year. The company recorded an EBITDA of ₹420 million, improving from the previous year’s negative ₹12,105 million, and an adjusted PAT of ₹3,510 million, shifting from a loss of ₹9,716 million.

According to a report by Emkay, Zomato’s Gross Order Value (GOV) grew by approximately 26% YoY in CY23. Zomato’s higher growth rate is attributed to the superior performance of its Quick Commerce segment. Emkay maintains a BUY rating on Zomato with a target price of ₹230 per share.