Zomato share price

Zomato Shares Rise 3% After Analysts Project Targets of Up to ₹370

Several leading global brokerage firms have provided positive ratings and raised their target prices for Zomato, reflecting optimism about the company’s future growth potential.

• CLSA: Maintained an ‘Outperform’ rating with a revised price target of ₹370 (up from ₹353). CLSA highlighted Zomato’s expanding market presence in the competitive food delivery industry and its ability to sustain growth.
• HSBC: Issued a ‘Buy’ rating with a price target of ₹330. HSBC noted that Zomato’s quick commerce segment outperformed expectations, and its stable margins, combined with the recent fundraise, will enable the company to remain competitive and aggressive.
• Nomura: Also maintained a ‘Buy’ rating with a price target of ₹320, praising the rapid growth of the quick commerce segment, which is seen as a future growth driver alongside the steady progress in food delivery.
• Nuvama Institutional Equities: Revised its target price upward to ₹325 (from ₹285) and retained a ‘Buy’ recommendation. Nuvama expects faster-than-anticipated growth in Blinkit’s dark store additions, although it cautioned that profitability could be delayed due to the high upfront costs associated with expansion.

Stock Performance and Market Sentiment:

• Zomato’s stock initially faced up to a 6% drop following the release of its Q2 earnings. However, the stock quickly recovered and gained 3%, reflecting investor optimism and support from positive analyst ratings.
• Despite the recovery, Zomato’s stock remains down 3.85%, trading at ₹246.50. The stock has dropped approximately 19% from its record high of ₹298, but analysts remain optimistic about its long-term growth prospects, driven by the strength of its core business segments and strategic investments.

Factors Contributing to Stock Recovery and Analyst Optimism:

1. Strong Revenue Growth: Zomato’s 69% year-over-year revenue increase demonstrates its ability to scale both its food delivery and quick commerce businesses, particularly as consumer demand for these services continues to grow.
2. Quick Commerce Expansion: The quick commerce segment, which includes Blinkit, has been a key area of growth, outperforming expectations in Q2. Analysts expect this segment to continue its rapid expansion, with Blinkit’s dark store network growing faster than anticipated.
3. Positive Margins and Steady Profitability: Zomato’s ability to maintain stable margins and generate profits for five consecutive quarters has instilled confidence among analysts, who believe the company is well-positioned to sustain this trend.
4. Fundraising for Expansion: The ₹8,500 crore QIP fundraising will equip Zomato with the financial resources needed to fuel its growth strategies and remain competitive in the highly aggressive food delivery and quick commerce markets.
5. Positive Analyst Ratings: Leading brokerages such as CLSA, HSBC, and Nomura have all maintained bullish outlooks on Zomato, raising their target prices to reflect the company’s improving fundamentals and future growth potential.

Advantages of Zomato’s Q2 Results:

1. Consistent Profitability: Zomato’s fifth consecutive profitable quarter showcases its ability to deliver consistent results, even in a competitive environment.
2. Rapid Revenue Growth: The 69% growth in revenue is a testament to Zomato’s successful expansion strategies, particularly in the quick commerce segment.
3. Strategic Fundraising: The ₹8,500 crore QIP will provide Zomato with ample liquidity to pursue growth opportunities and strengthen its market position.

Disadvantages of Zomato’s Q2 Results:

1. Stock Volatility: Despite strong financial results, Zomato’s stock has been volatile, with the share price falling from its record high of ₹298 to around ₹246.50, reflecting market uncertainty.
2. Delayed Profitability in Quick Commerce: While quick commerce is growing rapidly, profitability in this segment may be delayed due to higher upfront costs, as noted by Nuvama Institutional Equities.
3. Competition in Food Delivery: Zomato continues to face stiff competition from other food delivery platforms, which could pressure its market share and margins in the future.

Conclusion:

Zomato’s Q2 FY2025 results demonstrated strong growth in both its food delivery and quick commerce segments, supported by consistent profitability and positive margins. The company’s ₹8,500 crore QIP fundraising positions it well for future growth and investments. Analysts remain optimistic about Zomato’s long-term potential, with several raising their target prices, despite short-term stock volatility. As Zomato continues to expand its market presence, especially in quick commerce, it is likely to remain a key player in the Indian tech space.

FAQs:

1. Why did Zomato’s stock rise after Q2 FY2025 results?
   Despite an initial drop, Zomato’s stock recovered and gained 3%, driven by strong revenue growth, profitability, and positive analyst ratings.
2. What was Zomato’s revenue growth in Q2 FY2025?
   Zomato reported a 69% year-over-year increase in adjusted revenue, reaching ₹4,799 crore.
3. How did Zomato perform in terms of profitability?
   Zomato posted a net profit of ₹176 crore, marking its fifth consecutive profitable quarter.
4. What is Zomato’s plan for fundraising?
   Zomato’s board approved a ₹8,500 crore fundraising through the Qualified Institutional Placement (QIP) route to support future expansion.
5. What are the current analyst price targets for Zomato?
   • CLSA: ₹370
   • HSBC: ₹330
   • Nomura: ₹320
   • Nuvama: ₹325

Zomato share price

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