Why Analysts Believe Zomato Stock Could Reach A New All-Time High Over The Next Year

Zomato shares were on the up on Monday after the food delivery giant reported its second straight quarter of profit, with a net gain of ₹36 crore for the quarter ending September 30, a significant turnaround from the ₹251 crore loss a year earlier. The company’s revenue surged by 71% to ₹2,848 crore, thanks to a spike in orders during the festive season.

Zomato Q2 Performance: Deepinder Goyal, Zomato’s founder and CEO, attributes this growth to a strong performance across all business sectors. The company’s food delivery and quick commerce sectors saw a 13% increase in gross order value (GOV) over the previous quarter and a 47% rise year-on-year.

Food delivery GOV, which represents the total value of orders placed, climbed by 9% from the June quarter and 20% from the previous year, bouncing back from a recent demand slump. Quick commerce, under the Blinkit brand, also rebounded with a 29% growth in order volume.

Blinkit has turned a profit for the first time this quarter, with Zomato aiming for a break-even in quick commerce by next June. The company plans to open at least 100 new stores within the fiscal year, targeting around 480 stores by March 2024.

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Rakesh Ranjan, CEO of Zomato’s food ordering and delivery business, credits the growth to a surge in demand and efficient execution, despite challenges like reduced delivery partner availability during the rainy season. The company’s Gold program also contributed to the growth by encouraging more frequent orders among its members.

What do Analysts Have to Say? Analysts are bullish on Zomato’s prospects following its impressive quarterly results. Three of the 29 analysts tracking the company anticipate the stock to surpass its all-time high of ₹160 in the next year.

Brokerage firm CLSA holds the most optimistic view, issuing a “buy” recommendation with a price target of ₹168, suggesting a potential 43.6% upside from the current levels. Jefferies follows closely with a “buy” rating and a target of ₹165, citing the September quarter’s performance as a driver for substantial upgrades in forecasts.

The consensus among analysts is largely positive, with 25 out of 29 recommending a “buy.” They highlight Zomato’s effective strategy and execution, with Morgan Stanley and HSBC both setting their price targets at ₹140, expressing confidence in the company’s long-term trajectory, especially in the quick commerce segment.

Share Price: Zomato Ltd. shares were trading 2.92% higher at ₹119.90 on Monday shortly after market open.

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