Brokerages lift price targets as Zomato reaches a 52-week high and posts profits for the second consecutive quarter

 Brokerages lift price targets as Zomato reaches a 52-week high and posts profits for the second consecutive quarter

Zomato's sales increased by 71% year over year to Rs 2,848 crore, while the company reported a net profit of Rs 36 crore. The expansion comes at a time when the e-commerce industry is dealing with high inflation and sluggish demand.

Zomato's stock saw a 5 percent increase and reached a 52-week high of Rs 121.90 during the first trading session on November 6. The company's profit for the July-September period, which was its second consecutive quarter, impressed brokerages worldwide and led some of them to increase their price targets for the stock.

Zomato shares were up over 2 percent at Rs 118.60 on the NSE at 09.28 am. Following the release of the company's Q2 earnings on November 3, shares of the business also finished 8.3 percent higher on the NSE.

Zomato's sales increased by 71% year over year to Rs 2,848 crore, while the company reported a net profit of Rs 36 crore. In the same time last year, the business reported sales of Rs 1,661 crore and a net loss of Rs 302 crore. The expansion occurs when the e-commerce industry struggles with inflation and slowing demand.

Zomato's revenue growth was much better than anticipated, according to Nuvama Institutional Equities, which increased its price objective for the stock by almost 27% to Rs 140. The company noted that all businesses were continuing to develop at full speed.

The company maintained its "buy" recommendation on the stock in a note, saying, "Strong growth across business gives us trust that Zomato's ability to maintain its lead in catering services as well as gain market share in swift commerce."

Zomato anticipates modest sequential gross order value (GOV) growth in food delivery in the next quarter, ranging from high single digits, as it prioritizes growth above profitability. This could result in an on-year rise of about 25–30 percent.

HSBC is upbeat about Zomato's forecast for the next quarter and increased its price objective for the stock to Rs 140 while keeping a "buy" rating for the company. The company is nevertheless optimistic about Zomato's long-term prospects since it believes that its rapid commerce business will continue to grow.

According to Jefferies, a major investment worry about monthly transacting users (MTU) and frequency is addressed by Zomato's GOV growth acceleration. The firm has set a price objective of Rs 165 for the company, with a "buy" recommendation.

Zomato may achieve a robust 53 percent adjusted revenue compound annual growth rate (CAGR) during FY23–25 because to its dominating market position and significant development in the food delivery industry and Hyperpure, according to Motilal Oswal Financial Services.

"We now estimate Zomato to transform positive on reported Profit by 3QFY24 (earlier 4QFY24) and deliver 4.1 percent EBITDA margin in FY25," the MOFSL said in a note. The stock is recommended for "buy" by the brokerage, with a price objective of Rs 135 a share.

Zomato's strong September quarter result, according to Morgan Stanley, shows that its executive skills and plan are working effectively. After a solid Q2, the brokerage does, however, also anticipate some upside risk to Zomato's FY24 revenue. The stock has a price objective of Rs 125 and the brokerage has a "overweight" call on it.