Shares Of Profitable Zomato Touch New 52-Week High At INR 98.39; Brokerages Raise PTs

Shares Of Profitable Zomato Touch New 52-Week High At INR 98.39; Brokerages Raise PTs

SUMMARY

The sharp rise in Zomato’s share price was on expected lines as the company surprised its stakeholders with a consolidated net profit of INR 2 Cr in the June quarter of the current fiscal

At least eight out of the 26 brokerages covering the stock raised their price targets on Zomato, as they expect the company to sustain its profitability

JP Morgan raised the price target on Zomato to INR 100 from INR 90, while Morgan Stanley increase price target to INR 115 from 85

Shares of Zomato jumped over 14% to its 52-week high of INR 98.39 during the early trading hours on Friday (August 4) on the BSE, a day after the food delivery major reported its first-ever profitable quarter in Q1 FY24.“We expect Zomato to evolve into a triple engine profit machine over FY24 as it sees FD (food delivery) transform into a cash cow and sees monetization success across Dine Out and Blinkit,” said JP Morgan in a research note today, raising PT on Zomato to INR 100 from INR 90 earlier. It maintained its ‘overweight’ rating on the stock.However, Japanese brokerage Nomura said, “While we acknowledge that Zomato is likely to achieve its target of 4-5% EBITDA margin (as a % of GOV) earlier than our expectation, we continue to believe that it will be a challenge to achieve double-digit CM (contribution margin), with high growth in the long term.”“This (Zomato’s Q1) puts to rest all the concerns around Zomato’s ability to make ‘respectable’ profits. Results also give more credibility to the mgmt & its execution prowess, which is particularly positive for Blinkit which most investors ascribe zero (or negative) value,” the brokerage said.

The foodtech giant’s market cap soared to INR 82,111.4 Cr as against INR 74,518.82 Cr last Friday.

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