Shares of Zomato were gaining on Thursday after the food delivery firm got a thumbs up from several brokerages in light of a better growth outlook for improved profitability and demand.
What Happened: Kotak Institutional Equities, is the latest to provide a bullish outlook for Zomato, elevating its price target for the stock by nearly 14% to ₹125 while maintaining a “buy” rating.
The brokerage said Zomato's full-year gross merchandise value growth likely bottomed out in Q1 at 14% year-on-year and should improve from Q2.
Kotak Institutional Equities also expects enhanced profitability for Zomato in the upcoming quarters due to operating leverage-driven margin improvement in the food delivery sector and a reduction in losses for the Hyperpure and Blinkit businesses.
The brokerage has raised its GMV growth estimates for the next three financial to 18%, considering increased demand for food delivery. This also equates to a 10%-22% adjusted EBITDA and 10-30% net profit upgrade for the financial years ending 24 to 26.
Get all the latest Share Market trends and news to set you up for the week ahead.
Other Brokerages: Global brokerage Bernstein has also given a positive commentary on Zomato’s growth prospects, expecting a recovery in the food delivery market to drive stronger gross order value (GOV) growth. Bernstein has set a target price of ₹120 for the stock, implying an 11% potential upside.
Additionally, domestic brokerage ICICI Direct increased its target price for Zomato by over 33% to ₹160 while maintaining its “buy” rating. The brokerage sees the stock as a top pick within the Indian internet space.
Price Action: Zomato’s shares were up 1.28% at ₹110.40 in the afternoon session on Thursday after gaining around 3% earlier in the day.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.