After Zomato reported a third straight quarter of profit and also raised its revenue guidance on February 8, multiple brokerages have raised their target price on the food delivery firm's stock.
Global brokerage Bernstein has set a target price of ₹180 with an outperform call on the firm. Pointing to the year-on-year revenue guidance move from 40% to 50%, the brokerage said the food tech company has "raised the bar again" with medium-term growth expectations.
It believes Zomato's October to December 2023 result reinforces the durability of the platform. Within segments, food delivery continued to positively surprise, up 27% year-on-year while Blinkit grew a robust 103% YoY and 28% sequentially led by category expansion, it noted.
Jefferies, meanwhile, has a buy call on the stock and has raised the target price to ₹205, implying it expects up to 43% upside from the February 8 closing price on BSE. It called the firm’s quick commerce performance exceptionally strong for the quarter. It highlighted smart margin gains in food delivery but feels growth here could have been better. The brokerage has raised FY24-26 adjusted EBITDA estimate by 4-10%.
Morgan Stanley has maintained its overweight call and target price of ₹150. It also highlighted the firm’s quarterly beat on operating profits and good cash generation. The consolidated adjusted revenues and EBITDA were also above projections, it said.
HSBC too has a buy call on the stock and has raised its target price from ₹150 to ₹163, noting that the food delivery as well as quick commerce businesses performed better than expected.
Going forward, it expects normalisation in food delivery growth while it said quick commerce continues to perform both in terms of growth and profitability.
The brokerage commentary comes after the company reported its earnings for the December 2023 quarter in which its profit came it at ₹138 crore, as against a loss of ₹347 crore in the same quarter last year. Revenue grew 69% year-on-year to ₹3,288 crore, compared to ₹1948 crore in the corresponding quarter previous fiscal.
Zomato’s gross order value is back up to 25% and the management expects it to continue growing over 20% YoY.
The company also said that it is on track to meet its guidance of adjusted breakeven for Blinkit on or before the June quarter of FY25. Blinkit’s Gross Order Value doubled from last year, rising 103% to ₹3,542 crore.
Zomato shares ended more than a percent higher at ₹144 on BSE on February 8.
