Jefferies’ Chris Wood To Increase Investment In Zomato

Christopher Wood, global head of equity strategy at the brokerage firm Jefferies, is reportedly set to increase his investment in the Indian foodtech giant Zomato by another percentage point.

The development comes a month after Wood introduced Zomato in his portfolios. According to a CNBC-TV18 report, the investment in Zomato will come after reducing its stake in the state-run petro giant ONGC.

To be sure, Wood’s Greed & Fear introduced an investment in Zomato with a 4% weightage in the India long-only portfolio in May. The investment was made instead of HDFC Life, which was removed from the portfolio later.

Zomato was allocated a 4% weightage in Greed & Fear’s global long-only portfolio by reducing investments in Chinese stakes Alibaba and JD.com.

The interest in Zomato’s share price comes as the foodtech’s stock rallied recently. On Friday (June 30), the foodtech’s shares opened at INR 75 apiece, slightly under its IPO price of INR 76.

Zomato’s shares recently crossed their IPO price for the first time since April 2022, making a 52-week high of INR 80.30. Since June 30, 2022, shares of the foodtech giant have rallied more than 39%. As a result, brokerage firms have been optimistic about the foodtech giant’s shares.

Earlier this month, Kotak Institutional Equities suggested a GMV share of 55-45 in Zomato’s favour, reflecting strong execution and customer stickiness, despite discounts coming off the platform. At the same time, Citi noted that Zomato is ahead on the profitability curve compared to Swiggy.

Citi has maintained a ‘Buy’ recommendation on Zomato with a price target of INR 84 apiece. Kotak has also kept its ‘Buy’ rating on Zomato with a price target of INR 95.

Last week, brokerage firm JM Financial termed Zomato and Swiggy ‘indispensable’ to the restaurant industry. It said that restaurants in India can attribute a third of their revenue to food delivery aggregators. 

“With no meaningful competition in sight, we believe both incumbent aggregators are becoming indispensable to the ecosystem,” the report said.

Earlier this week, Zomato introduced a multi-restaurant cart feature. Earlier, users could add items from only one restaurant at a time. In the fourth quarter of FY23, the foodtech’s net loss narrowed by 48% year-on-year (YoY) to INR 187.6 Cr. 

Zomato further claimed that the business was adjusted EBITDA positive excluding its quick-commerce vertical Blinkit.