Zomato‘s share price jumped back in the green on Friday after a major brokerage firm maintained its positive outlook on the stock. The food delivery major’s stock had closed 0.75% lower at ₹197.05 on Thursday.
What Happened: Bernstein maintained its “buy” rating on Zomato with a target price of ₹230, emphasising the company’s robust market leadership, pricing power, and efficient delivery system. The brokerage firm’s target indicates an around 17% upside from the stock’s last closing price.
The brokerage house said that Zomato’s strong market position and pricing power play crucial roles in enhancing its margins. The company is well-positioned to leverage various margin expansion levers, which will further boost its profitability.
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The analysts added that Zomato’s advertising revenue potential remains largely untapped. Currently, only 4-5% of its gross merchandise value (GMV) is derived from ad income, whereas global retailers often achieve higher percentages. This indicates significant room for growth in Zomato’s advertising revenues.
The company’s asset-light business model is another critical factor in its financial strategy. This model is expected to drive a substantial increase in return on invested capital (ROIC). The brokerage predicts ROIC rising from 9% in FY25 to 35% in FY30.
On Thursday, Kotak Securities also maintained its “buy” rating for the stock with a price target of ₹225.
Price Action: Zomato’s share price was up 0.47% to trade at ₹197.95 as the markets opened on Friday.
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