Shares of Zomato were volatile on Friday after the food delivery firm posted a profit for the third consecutive quarter, feeding hopes of sustainable long-term bottom-line growth.

What Happened: Zomato announced a net profit of ₹138 crore for the December quarter. Revenue also saw a substantial increase, rising by 69% year-on-year to ₹3,288 crore.

These gains come when the broader e-commerce sector faces challenges due to high inflation and subdued demand. Zomato attributed its strong performance in the quarter to the positive impact of events like the Cricket World Cup and the festive season.

In comparison, during the same quarter last year, Zomato had reported a net loss of ₹347 crore and revenue of ₹1,948 crore.

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Analyst Reactions: Brokerages have responded positively to Zomato’s latest quarterly earnings report, with many institutions revising their target price upwards for the online food aggregator’s stock.

Analysts at Bernstein noted that Zomato has once again set high expectations by aiming for medium-term growth of around 50% year-on-year. This growth is expected to be driven by Blinkit, which has shown impressive acceleration in recent quarters, with a growth rate of 103% over the past year.

Given the positive outlook for the food delivery segment, Jefferies raised its target price on Zomato to ₹205 per share, with a “buy” recommendation. HSBC also increased its target price on Zomato from ₹150 to ₹163, anticipating a gradual improvement in performance compared to the previous year.

Key factors to monitor moving forward, according to Elara Securities, include Zomato’s expansion beyond metro areas and the level of competition it faces in the future.

Kotak Securities also maintained its “buy” rating for the stock with a price target of ₹190. The domestic brokerage said that the company’s food delivery business was steady and Blinkit‘s business grew rapidly with lower losses.

Price Action: Zomato’s share price was up 0.69% at ₹145.45, coming off gains of nearly 4% in early morning trade on Friday amid strong risk-off sentiment in the broader market.

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