Bernstein Ups Zomato PT To INR 230, Cites Blinkit’s Q4 Growth

Zomato Block Deal: Antfin Singapore To Offload Shares Worth $408 Mn

SUMMARY

In a note, the brokerage called Zomato its “top pick” among Indian new-age tech companies citing improving profitability and “impressive” growth by Blinkit

The brokerage firm also said that Blinkit will likely continue its aggressive store expansion as it looks to achieve the 1,000 store mark by the end of March 2025

The thumbs up comes at a time when shares prices of Zomato have soared more than 210% in the past 12 months and 57% on a YTD basis

Following Zomato’s Q4 results, brokerage firm Bernstein maintained its “OUTPERFORM” rating for the foodtech major’s stock and raised its price target (PT) to INR 230 from INR 200 earlier.

This represents a premium of more than 18% from the stock’s last close of INR 193.7 on the BSE on Monday (May 13).

In a note, the brokerage called Zomato its “top pick” among Indian new-age tech companies citing improving profitability and “impressive” growth by quick commerce arm Blinkit.

“Zomato continues to reinforce our conviction on quick commerce business achieving (the) breakeven milestone. Growth for Blinkit impressed again (GOV +97% YoY /+14% QoQ)… Core business Food delivery delivered strong GOV growth of 28% YoY with profit expanding… We see Zomato as a core internet holding. Raise our TP to INR 230..,” said Bernstein.

The brokerage firm also said that Blinkit will likely continue its aggressive store expansion and add 100 stores in Q1 FY25 as it looks to achieve the 1,000 store-mark by the end of March 2025.

On the food delivery front, Bernstein said that the foodtech major saw strong average order value (AOV) and order growth during the quarter ended March 2024, adding that contribution margin saw healthy expansion on the back of higher AOV, ad take rate and platform fee.

The brokerage firm gave its thumbs up just hours after Zomato released its financial numbers for Q4 FY24. Continuing its profit spree, the foodtech major reported a consolidated profit after tax (PAT) of INR 175 Cr in the period under review, up 26% from INR 138 Cr in the preceding quarter. In contrast, the company posted a net loss of INR 187.6 Cr in Q4 FY23.

Meanwhile, quick commerce vertical Blinkit turned adjusted EBITDA positive in March 2024 on the back of healthy growth in the number of orders and AOV during the three month period. While revenue rose 19% sequentially to INR 769 Cr in Q4 FY24, the platform’s EBITDA loss improved to INR 37 Cr in the period under review from INR 89 Cr in the Q3 FY24.

The results come as the foodtech major’s stock continues to see upward movement on the bourses. Banking on profitable numbers, shares prices of Zomato have soared more than 210% in the past 12 months and 57% on a year-to-date (YTD) basis.

Meanwhile, Zomato on Monday also announced plans to float a new ESOP scheme under which it plans to grant 18.26 Cr stock for eligible employees. As per the stock’s last closing, the ESOP plan would translate to shares worth over around INR 3,500 Cr.

On the same day, the company also announced plans that its fintech arm Zomato Payment would voluntarily surrender its online payment aggregator licence back to the Reserve Bank of India (RBI).

Shares of Zomato closed 3.82% lower at INR 193.70 on the BSE on May 13.