Zomato Gains Over 2% To 52-Week High After HSBC Raises Target To INR 150

Shares of food delivery major Zomato gained by as much as 2.5% to a 52-week high of INR 138 a piece on BSE during Thursday’s session (January 11).

This was after global brokerage firm HSBC, while retaining its ‘buy’ rating on Zomato, raised its target for the stock by Rs 10 to INR 150 per share.

HSBC analysts shared a positive long-term outlook for Zomato, maintaining a constructive view despite anticipating subdued growth in the calendar year 2024.

Meanwhile, Elara Securities analysts shared a “buy” recommendation on Zomato recently after the foodtech giant raised its platform fee for food delivery services by 33%, hiking it from INR 3 to INR 4 per order, setting a target price of INR 150.

“We believe the uptick in convenience fee per order will play an important role in improving adjusted Ebitda of Zomato’s food delivery, which stood at INR 2,040 Mn in Q2FY24. The total number of orders for the food delivery business stood at 650mn in FY23; we expect orders to reach 830 Mn in FY25E and 940 Mn in FY26E,” the brokerage firm said.

It further said that the company’s profitability in the food-delivery business will be driven by increased convenience fees, advertising income and restaurant commissions.

At 12:23 PM on Thursday, Zomato’s shares were trading at INR 137 apiece on BSE, as compared to INR 134 in the previous close.

The share price of the foodtech major more than doubled last year. The stock, which was trading in the INR 50-60 range in the first month of 2023, ended the year at above INR 120.

Zomato has been focusing on its profitability lately. The startup reported its second consecutive profitable quarter, with profit after tax surging to INR 36 Cr during the September quarter of the financial year 2023-24 (FY24). This was an 18X jump from PAT of INR 2 Cr in the preceding quarter.

Meanwhile, Zomato and Swiggy, the duo, reportedly received notices for a cumulative goods and services tax (GST) worth around INR 1,000 Cr, which is the 18% tax levied on the total amount collected by them as delivery fees ever since they started offering food delivery services.