Shares of Zomato were gaining on Thursday after the food aggregator received an upbeat recommendation from analysts at Citi.

What Happened: After Ant Group-owned Alipay Singapore Holdings parted ways with Zomato, analysts at Citigroup have sounded a bullish note, giving the food delivery platform a “buy” recommendation.

Citi’s latest analysis set a target price of ₹145, signaling a substantial 25% potential gain from current price levels. While Zomato’s shares closed positively at ₹117.30 on Thursday after Alipay’s exit, it has seen a notable correction of over 7% since the conclusion of the Cricket World Cup 2023.

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The exit of Alipay Singapore Holding unfolded through open market transactions, with the foreign investor selling off its entire 3.44% stake, equivalent to 29.60 crore equity shares. The divestment was executed at an average price of ₹112.70 per share, aggregating to a substantial ₹3,336.75 crore.

At the same time, however, Morgan Stanley Asia (Singapore) Pte entered the scene, acquiring 4.4 crore equity shares, making up a 0.51% stake in Zomato, at an average price of ₹112.70.

Analysts‘ Reasoning: Citi’s positive stance comes in the wake of a correction in Zomato’s stock, attributed to media reports hinting at a potential goods and services tax (GST) penalty on customer delivery charges. The speculated GST revisions could introduce an additional ₹5 per order for non-Zomato Gold orders, potentially acting as a catalyst for greater adoption of the Gold program loyalty.

Despite market fluctuations, Citi underscored Zomato’s resilience and growth potential and considers the current correction as an opportune entry point.

Price Action: Zomato’s share price was up 1.11% at ₹117.90 around noon on Thursday.

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