Zomato share/ stock price in focus: Brokerages remain bullish on Zomato post Swiggy report

Shares of Zomato climbed close to 2 per cent on Tuesday’s early trade. Brokerages have been bullish on the stock following Prosus’ report on Swiggy, which disclosed that the latter’s GOV revenue was up 26 per cent in the last calendar year, similar to Zomato.

Domestic brokerage Emkay Global stated that Zomato’s higher growth has been aided by superior performance in quick commerce.

It added that Swiggy’s food delivery profitability improved on account of operating leverage with additional revenue streams, after turning EBITDA positive in March 2023. Its overall losses narrowed to $261 million (from $531 million in calendar year CY 2022).

Emkay’s analysts added that steady improvement in operational performance and the planned IPO of Swiggy are likely to keep investor interest high in the space. The brokerage has maintained a ‘buy’ call on Zomato with a target price of ₹230 per share.

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JM Financial emphasised in its report that Swiggy lagged behind Zomato both in terms of growth as well as profitability on a relative basis, while on an absolute basis, the former’s numbers were impressive.

“While Swiggy has confidentially filed its pre-DRHP, we believe a successful public listing largely hinges on the management’s ability to demonstrate a clear path to adjusted EBITDA break-even at a consolidated level and arrest market share losses in food delivery as well as quick commerce business,” the brokerage added.

Global brokerages CLSA and UBS have given ‘buy’ ratings on Zomato at a target price of ₹248 and ₹250, respectively.

Nuvama Institutional Equities, in its May 2024 report, maintained a ‘buy’ call on Zomato with a revised target price of ₹245.

Another brokerage, Geojit Financial Services, also reiterated its ‘buy’ rating on Zomato in May 2024 with a revised target price of ₹220.

Zomato stock traded at ₹202.50 on the NSE, higher by 1.80 per cent as of 10.40 am.

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