Zomato Share Price Gains on Jefferies’ Positive Stock Forecast
Zomato Stock Performance Analysis
Zomato shares are increasingly appealing, trading marginally higher as Jefferies maintains a 'buy' rating. The firm has set a base case target price of Rs 335, pointing to a potential upside of 29% from the previous close. Jefferies highlighted several key growth drivers in Zomato's food delivery segment designed to boost its competitive edge.
Growth Catalysts for Zomato
- India's booming food services sector enhances Zomato's market position.
- Only 20 million monthly transacting users reveal significant potential for customer acquisition and revenue expansion.
- Blinkit leads the quick-commerce market and is poised for margin improvements.
Jefferies forecasts a compound annual growth rate (CAGR) of about 20% in delivery revenue from FY24 to FY27. As Zomato scales up operations, improved unit economics are anticipated due to cost efficiencies and an increased customer appetite for convenient solutions.
Valuation Insights
The brokerage values Zomato's delivery segment at 55 times its two-year forward adjusted EBITDA, quick commerce at 12 times two-year forward sales, and the going-out business at 2.5 times gross order value (GOV).
Market Outlook and Investment Considerations
In a bullish scenario, Jefferies sets a target price of Rs 360, indicating a 40% upside due to anticipated 25% CAGR in delivery revenue. Conversely, a downside target price is pegged at Rs 200.
Positive factors affecting the stock's near-term performance include:
- Favorable macroeconomic conditions.
- Increase in discretionary spending.
- Rapid digital commerce adoption.
- Improving average order values and unit economics.
Meanwhile, challenges such as escalating competition, lagging market growth, and regulatory hurdles must be monitored closely.
Currently, Zomato shares hover around Rs 259.85 on the National Stock Exchange (NSE), marking a remarkable 108% gain this year, well ahead of Nifty's 16% increase.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.