Zomato shares have recently seen a notable increase, rising by 1.85%, reflecting a broader trend of growth for the company. This surge is part of a remarkable year, where Zomato’s stock has soared by 126%. As of October 14, 2024, analysts and investors are keenly observing the stock’s trajectory and considering their next moves.
Main Points
Zomato’s share price currently stands at approximately ₹274.15, having experienced significant fluctuations in recent weeks. The stock has gained about 11% in just two weeks and has risen by 186.7% over the past year. Analysts highlight that this performance is attributed to Zomato’s robust growth in both food delivery and quick commerce sectors. The company’s strategic focus on profitability has also contributed to its positive outlook.
Several brokerage firms have issued optimistic projections for Zomato. For instance, UBS maintains a buy rating with a target price of ₹320, citing consistent growth in industry volumes. Similarly, JP Morgan has raised its target from ₹208 to ₹240, while Jefferies projects a base case target of ₹335, indicating a potential upside of approximately 31% from current levels
.Key Analysts’ Insights:
- Ajit Mishra, Senior VP at Religare Broking, suggests that traders should accumulate shares during this consolidation phase with a stop loss at ₹250 and a target of ₹320.
- Pravesh Gour, Senior Technical Analyst at Swastika Investmart, advises holding the stock with price targets between ₹280-300.
Strategic Acquisitions
Zomato’s recent acquisition of Paytm’s events and movies ticketing business is seen as a strategic move to diversify its offerings. This acquisition allows Zomato to tap into the live entertainment market, which is expected to grow significantly. Analysts believe that this will enhance Zomato’s customer base and provide opportunities for cross-selling services across its platforms
Financial Metrics
The company has shown impressive financial metrics:
- Market Capitalization: Approximately ₹2.39 lakh crore.
- PE Ratio: Currently at 150.93.
- Beta: A low beta of 0.7 indicates less volatility compared to the broader market.
- CAGR: A compound annual growth rate of 57% over the past three years highlights its strong growth trajectory.
Analysts are optimistic about Zomato’s future due to several factors:
- Expansion in Quick Commerce: The quick commerce segment (Blinkit) is expanding rapidly with an increasing number of dark stores.
- Profitability Goals: There is an expectation for EBITDA margins to improve significantly over the next few years, from 0.3% in FY24 to around 15.1% by FY27.
- Market Trends: The overall food delivery market in India is growing, with Zomato positioned as a leader in this space.
Investment Considerations
For investors considering entering or expanding their positions in Zomato, several factors should be taken into account:
- Current Price Levels: With shares trading around ₹274, there are varying opinions on whether it is a good time to buy or hold.
- Resistance Levels: Immediate resistance is noted around ₹280, while support levels are identified at ₹240 and ₹220.
- Market Sentiment: The overall sentiment towards tech stocks remains bullish, which could benefit Zomato as it continues to innovate and expand its services.
In summary, Zomato’s recent performance and strategic initiatives position it well for continued growth in the competitive food delivery and quick commerce markets. Investors are advised to monitor market trends closely while considering their investment strategies.
Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.
