Zomato shares up 126% this year: Still time to catch the bull run?

Shares of the food delivery giant have performed exceptionally well, delivering a multibagger return of 126% in the current calendar year, and analysts are still bullish on the company’s future ambitions.

Zomato’s overall strategy reflects a strong focus on profitability and scaling across multiple verticals. The food delivery segment is the core of its business, where Zomato has achieved steady growth, reaching 13% GMV growth in USD terms by the end of FY24.

“The improvement in the company’s margins is notable, with its EBITDA margin forecast to expand from 0.3% in FY24 to 15.1% by FY27, reflecting operational efficiency and higher average order values,” said Sonam Srivastav, Founder, Wright Research.

In parallel, Zomato’s fast commerce (Blinkit) has shown impressive traction, capitalizing on the growing consumer shift towards faster delivery. Blinkit’s expanding dark store network, now at 433 locations, enhances Zomato’s reach, while its SKU expansion increases basket size.

These efforts point to a diversified strategy where Zomato is not just for food delivery but also for fast commerce and now the entertainment space, Srivastava added.

Srivastava believes that Zomato’s growing cash reserves, by FY27 will reach Rs. 213 billion, giving it flexibility to pursue growth and new business lines, providing a strong foundation for its future ambitions.

Foreign brokerage firms like UBS, Jefferies and JP Morgan have also expressed confidence in the stock given its past performance and future prospects.

On Wednesday, global brokerage firm UBS on the company’s growth optimism raised Rs. It maintained its buy rating on the stock with a target price of 320 and said industry volume is growing around 2.5% on a month-on-month (MoM) basis. Aug ’24, adjusted for number of days.

At the start of the month, JP Morgan’s target price for the stock was earlier Rs. 208 to Rs. 240, while maintaining an overweight rating on it, saying Zomato is leading the rapid retail consumer transformation through convenience and choice-focused quick commerce. The company is going deeper in all metros by proving the model in NCR.

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Meanwhile, Jefferies paid Zomato Rs. gave a base case target of 335 (+31%) and believed that Zomato has made some interesting initiatives in food delivery that will strengthen the franchise and therefore, expects a 20% CAGR in delivery revenue during FY24-24. 27.

Technically, Zomato has been in a consolidation phase for the past one month and today it hit a new record high.

“It may spend some time around the upper range before continuing its upward trend,” said Ajit Mishra – SVP, Research, Religare Broking.

Mishra advises traders to use this phase to accumulate positions, including Rs. 250 and stop loss at Rs. A potential target of 320 levels.

Optimism started when Zomato struck a deal with Paytm to acquire its events and movies ticketing business which was completed recently and following this, global brokerage firms like Jefferies and JP Morgan also took a positive stance on the stock.

As per the agreement with Paytm, Zomato was to acquire OCL’s entire ownership stake in OTPL and WEPL through a share purchase transaction, resulting in Orbgen Technologies Private Limited (OTPL) and Wasteland Entertainment Private Limited (WEPL) becoming wholly owned subsidiaries. A food delivery player.

Shares of Zomato have gained 186.7% in the last one year and even in short periods of 1 and 2 weeks the stock has given impressive gains of 11% and 12.2% respectively.

(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)