Zomato Ltd shares continued their upward trajectory on Friday, climbing another 2% to reach Rs 221.30. This surge pushed the company’s market capitalisation close to Rs 1.95 lakh crore. Analysts remain optimistic about the stock, as it recently turned profitable and is expected to report significant revenue growth.
Brokerage firms have highlighted Zomato as a top buy in the internet sector. Elara Capital projects that Zomato’s revenue will reach Rs 39,600 crore in Q1FY25, marking a 63.9% year-on-year increase. This growth is driven by strong performance in both food delivery and quick commerce segments.
Despite the positive outlook, May 2024 saw a slight slowdown due to heat waves, low availability of delivery partners in Tier I markets, and the General Elections, which affected order volume. However, the volume picked up pace in June, and this momentum is expected to continue.
Elara Capital has adjusted its valuation methodology for Zomato, now considering ESOP costs as a regular business expense, which led to a revised target price of Rs 230 per share, down from Rs 250.
StoxBox notes that Zomato’s stock has entered a consolidation phase after a significant increase of 364% from its all-time low. The stock shows strong EPS strength, buyer demand, and relative price strength compared to the market. The daily and higher timeframe Relative Strength Index (RSI) indicates potential for further momentum, with a recommended buy near Rs 206 per share and a target price of Rs 225.
Zomato’s quick commerce segment, Blinkit, is set for aggressive expansion. The management plans to double store count and increase Gross Order Value (GOV) by 4x in the coming fiscal years, aiming for EBITDA neutrality soon.
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