Zomato Shares Surge Over 7% After CLSA Raises Target Price To INR 400 

Zomato Shares Surge Over 7% After CLSA Raises Target Price To INR 400 

SUMMARY

The brokerage firm added Zomato’s stock to its 'high conviction' list, giving a target price of INR 400 per share

This price target marks an upside potential of 64% from the previous close price

However, the shares shed gains later, trading 1.17% higher at INR 246.8 at 11:33 AM

Shares of Zomato


Sector
Consumer Services
Stage
Undisclosed
Total Funding
$4.59 Bn+
surged as much as 7.27% to reach INR 261.75 during the intraday trading session on the BSE today (January 16) as Hong Kong-based brokerage CLSA reaffirmed its ‘outperform’ rating for the foodtech major. 

However, the shares shed gains later, trading 1.17% higher at INR 246.8 at 11:33 AM. The company’s market capitalisation stood at INR 2.38 Lakh Cr at the time above, with as many as 3.54 Cr shares having changed hands by then.

The brokerage firm added Zomato’s stock to its ‘high conviction’ list, giving a target price of INR 400 per share. This price target marks an upside potential of 64%. 

While the stock has given a return of above 85% over the last year at the current market price value, it underwent a correction of around 17% in the last month. 

The brokerage firm viewed this decline as a buying opportunity, particularly as the quick commerce sector is anticipated to grow significantly, with a projected 51% revenue CAGR from FY24 to FY27.

It further pointed out that although margins may soften in the short term due to expansion efforts, the company’s overall profit pool is expected to expand substantially over the next three years. 

Yesterday the company also announced that its board meeting is set for January 20 to consider and approve the unaudited financial results (both standalone and consolidated) for the quarter and nine months ending December 31, 2024.

Recently, Zomato launched its 10-minute food delivery service Bistro. Its counterpart Swiggy too rolled out a new app, ‘SNACC’ offering the same food delivery service. 

Today’s rally comes two days after brokerage firm Jefferies conveyed that it foresees the inclusion of foodtech major Zomato and Jio Financial Services (JFS) in the benchmark index Nifty 50 soon. 

With this, Jefferies sees an inflow of $620 Mn to Zomato and $356 Mn to JFS. In its report, the brokerage said that the two players are likely to take the spot of Bharat Petroleum Corporation Ltd and Britannia Industries on the index. 

Not to mention, Zomato was included in BSE Sensex in November this year. 

Earlier this month, Jefferies gave bearish outlook to Zomato. The brokerage firm has given the Sensex listed foodtech major a ‘Hold’ rating along with a price target (PT) of INR 275, which is a downside of 18% from its previous PT of INR 335 for Zomato.