Zomato Among Jefferies’ ‘Top Picks’ For The Next Five Years

Now, Zomato Rolls Out Operational Requirement Initiative For Partner Restaurants

SUMMARY

Jefferies expects Zomato's share price to reach INR 400 from its current price of about INR 160

The brokerage expects the foodtech startup’s profit to rise 20X in the FY24-FY30 period and sees the stock providing over 150% returns during this period

Meanwhile, UBS has maintained its ‘buy’ rating and price target of INR 195 on Zomato, which implies an upside of almost 22% to the stock’s last close on Friday

Zomato has found a place in the list of “top picks” of Jefferies for the next five years as the brokerage sees a 2.5X upside in the foodtech startup’s share price by March 2029.

Jefferies expects Zomato’s share price to reach INR 400 from its current price of about INR 160.

The listed Indian startup has found its mention in the list along with the likes of Ambuja Cement, Axis Bank, Bharti Airtel, JSW Energy, L&T, Max Healthcare, SBI, TVS Motors, Amber, and Macrotech.

“Low penetration levels in core segments offer a long runway to growth with both food delivery (19% GOV CAGR over FY24-30) and quick commerce (40% CAGR) expected to jump,” said Jefferies analysts on Zomato’s growth potential.

They expect its profit to rise 20X in the FY24-FY30 period and see the stock providing over 150% returns during this time period.

Meanwhile, UBS in a research note has said that Zomato’s year-on-year growth would remain healthy and within the company’s guidance of more than 20%.

The brokerage has maintained its ‘buy’ rating and price target (PT) of INR 195 on Zomato, which currently implies an upside of almost 22% to the stock’s last close on Friday. However, UBS reportedly expects some downside to the consensus gross merchandise value (GMV) estimates.

Shares of Zomato jumped about 3% to INR 164.45 on the BSE during the early trading hours on Monday (March 18). However, they shed most of their gains later and were trading 0.7% lower at INR 158.75 by 3:10 PM IST.

It is also pertinent to note that Zomato said in a filing on Saturday that it received a goods and services tax (GST) penalty notice from Gujarat’s Deputy Commissioner of State Tax, pertaining to FY19.

The company has been asked to pay a total amount of INR 8.58 Cr, including interest and penalty.

In a research note last week, HSBC increased its PT on Zomato to INR 200 from INR 163, which currently implies an upside of over 25%, on the back of an increase in its order growth rate expectations for Blinkit.

Fuelled by the company’s three profitable quarters, shares of Zomato are trading over 29% higher year to date.