Zomato Shares Rise As Brokerage Notes Upper Hand Over Swiggy

Brokerage firm CLSA maintained its positive stance on food delivery company Zomato as Prosus' annual report showed competitor Swiggy's growth was slower than the former’s.

What Happened: CLSA maintained its "buy" call with a target price of ₹248, implying an upside of 24%. The brokerage reiterated its stance on the company, based on Prosus' annual report for FY24, which shows Swiggy's sales lagging behind Zomato. 

According to the report, Swiggy's overall gross order value (GOV) grew by 26% year on year. The overall GOV includes the food delivery and quick commerce businesses. In the corresponding period, Zomato exhibited a growth of 36%. 

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Swiggy's overall revenue growth was 24% year on year while Zomato's adjusted revenue growth was 55.9% year on year. 

Swiggy's trading losses reduced to $158 million (around ₹1318 crore) in FY24 and its EBITDA turned positive in the year at $5 million (around ₹41.72 crore). 

Most brokerages are bullish on Zomato's businesses compared to its competitors. Morgan Stanley recently maintained its "overweight" call on Zomato with a target price of ₹235, reasoning Zepto's $665 million (₹5,560 crore) fundraising has increased the profile of quick-commerce channel, where Zomato already has a meaningful presence due to Blinkit

Price Action: Shares of Zomato rose 2.53% to ₹203.96 on Tuesday morning. 

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