Zomato Shares Shot 3.5% Today: What's Behind The Surge?

Zomato shares saw yet another late spurt in share value on Friday after it made a fresh hike in the price of its subscription-based offering dubbed ‘Zomato Gold.’

What Happened? The popular food-delivery app re-launched ‘Zomato Gold’ a few months back with an introductory subscription package for 3 months priced at ₹149. Although in stages, that price has only shot up over time with the package now priced at ₹299. Investors appear to be quite cheerful about the move.

Following the uptick in Gold prices, brokerage firm Kotak Institutional Equities retained its ‘Buy’ rating on Zomato with a target price of ₹82, signalling an upside potential of 60% from the current market price of ₹51 a share.

“We believe Zomato will eventually increase its pricing by offering higher renewal prices to existing customers (only three-month plans are on offer currently). Further, Zomato is also negotiating for higher take rates with restaurants, which can also offset any impact of Zomato Gold,” Kotak Equities said.

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Kotak’s analysts point out that Zomato has previously tried tinkering with new Blinkit services, such as offering printouts and high average order value (AOV) products like phones; those that didn’t work were soon abandoned. The firm believes that the introduction of local services is another such effort and shouldn’t result in a major financial drain.

Per a report from early March, Blinkit could soon move into the home services category where it intends to take on the likes of Urban Company.

Price Action: Zomato shares were trading 3.5% higher at ₹54.94 on Friday afternoon.

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