Shares of Zomato Ltd scaled 2% to hit a 52-week high of ₹137.95 apiece on the NSE after global brokerage firm HSBC assigned a 'Buy' rating on the stock and raised the target price to ₹150, suggesting an upside of 11% from the current market levels. At 2 pm, the scrip was trading 2.08% higher at ₹137.35 per share.
Zomato has a consensus target price of ₹135.88 per share. The stock has risen 150% in 2023, and is up over 10% so far this year.
After an extremely strong 2023, the foreign brokerage expects relatively muted business and stock performance in 2024. However, HSBC said that Zomato's long-term view remains constructive.
"Since Zomato is highly dependent on continued progression of quick commerce business, any slowdown in quick commerce growth will be a key downside risk," it said.
Analysts at Elara Securities have also shared a 'Buy' rating on the counter with a target price of ₹150, saying the company's higher convenience fees, advertising income and commission from restaurants were key levers to improve profitability of the food- delivery business.
"We expect another 10-20 basis point expansion each in the take rate of FY25E and FY26E due to incremental convenience fee of Re 1 in select markets," the brokerage house said.
The food delivery giant recently received a Good and Services Tax (GST) notice over a tax liability of ₹401.7 crore. The Directorate General of GST Intelligence (DGGI) had sent tax notice to Zomato for not paying GST on delivery charges and said the delivery charges fall under the services category and the firms are liable to pay 18% GST.
Zomato responded to a show cause notice issued by DGGI and said it is not liable to pay any tax and said, "The delivery charge is collected by the company on behalf of the delivery partners. Further, in view of the contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company."
"This is also supported by opinions from our external legal and tax advisors. The Company will be filing an appropriate response to the show cause notice," Zomato said in a disclosure statement.
First Published: Jan 11, 2024 2:12 PM IST
Note To Readers
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
