Zomato share price: In early trading on Friday, Zomato’s share price surged over 4%, reaching a new 52-week high following the company’s impressive quarterly results for December 2023. The strong growth in food delivery businesses drove this performance. Zomato shares peaked at ₹150.25 each on the BSE, marking a gain of 4.34%.
In the third quarter of FY24, Zomato, an online meal delivery platform, reported a net profit of ₹138 crore as opposed to a loss of ₹347 crore during the same time the previous year. Quarter over quarter (QoQ), Zomato’s net profit increased by 283%. Zomato recorded revenue from operations of ₹3,288 crore in Q3FY24, marking a significant growth of 69% compared to ₹1,948 crore in the same period last year.
The gross order value (GOV) for food delivery, representing the total value of all orders placed, increased by 25% year-on-year (YoY). Zomato anticipates that the GOV will maintain a growth rate of over 20% YoY, with the possibility of further acceleration if the company observes greater-than-expected market share gains and a resurgence in overall consumer demand.
Zomato’s shares closed 2.42% higher on Thursday following the release of its Q3 results.
According to the foreign brokerage firm Jefferies, Zomato’s performance in Q3FY24 was commendable, particularly in terms of quality and control, along with notable margin improvements in food delivery. While it believes that growth could have been stronger, the results are deemed acceptable considering the prevailing weaknesses across various consumption categories.
Jefferies raised its adjusted EBITDA estimates by 4-10%. In its projections, Jefferies anticipates approximately 25% compound annual growth rate (CAGR) in delivery revenue from FY23 to FY26. The firm expects unit economics to enhance progressively as Zomato achieves greater scale, unlocking cost efficiencies, and as customer demand for convenience rises. The firm has assigned a ‘Buy’ rating to the stock and increased the target price to ₹205 per share from its previous ₹190.
Zomato share price rises 4% to 52-week high after strong Q3 results as analysts raise target
According to analysts at Emkay Global Financial Services, Zomato demonstrated impressive execution yet again in the latest quarter, with growth observed across all segments. “Food delivery gross order value (GOV) increased by 6.3% quarter-on-quarter (QoQ), although it did not meet our or the company’s anticipated levels due to subdued demand conditions. The contribution margin for food delivery saw a further improvement to 7.1%, supported by ad-monetization and platform fees. Blinkit continued its impressive performance with a 28% QoQ growth in GOV, accompanied by a further reduction in losses,” stated Emkay Global.
Zomato anticipates that consolidated adjusted revenue will grow by over 50% year-on-year in the coming quarters, with Blinkit playing a significant role in driving this growth.
Emkay Global raised its EPS estimates for FY25-26E by 1-2%, reflecting the performance in Q3 and changes in the revenue mix. With an improved understanding of Blinkit’s product-market fit and path to profitability, Emkay now values it at 1x FY26 gross order value (GOV), as opposed to its previous book value assessment. The brokerage maintained its ‘Buy’ rating on Zomato and increased the target price to ₹170 per share from ₹140, based on a sum-of-the-parts (SOTP) analysis. This valuation includes the food delivery business valued at ₹119 per share using a discounted cash flow (DCF) approach, Blinkit valued at ₹36 per share at 1x FY26E gross order value (GOV), and cash and other investments valued at ₹15 per share at book value.
Over the last year, Zomato shares have surged by over 121%.
At 9:20 am, Zomato’s shares were trading at ₹149.40 apiece on the BSE, showing a 3.75% increase.
