Is Zomato still a good investment?
The Zomato share price jumped 19% during morning trade on Friday, August 2, reaching a new all-time high of ₹278.45. This came just one day after the firm released its Q1FY25 results for the April-June quarter. On the BSE, the stock began trading 5% higher at ₹244 per share. At ₹262.45 per share, the shares closed 12.11 percent higher. With a spectacular one-day surge of about ₹25,000 crore, the stock’s market capitalization on the BSE increased from ₹2,06,640 crore in the previous session to ₹2,31,664 crore on Friday due to the substantial increase in its value.
Driven by increasing gross order value across its meal delivery, quick commerce, and going-out verticals, Zomato’s consolidated net profit for Q1FY25 jumped to ₹253 crore from ₹2 crore in the same period last year.
For the reviewed quarter, total revenue was ₹4,442 crore, up from ₹2,597 crore in the same period last year. On Thursday, August 1, the stock finished 2% higher at ₹234.10 following the release of the results. The share price of Zomato increased by a remarkable 202% in the last 12 months. Because of the company’s excellent development and profitability potential, the majority of brokerage companies still think the stock is worth buying despite these significant increases.
brokers upbeat on a solid Q1 performance Following the release of the company’s better-than-expected Q1 scorecard, a number of brokerages boosted their target prices and expressed bullish views on the stock.
Nuvama Wealth, a brokerage firm, kept a buy call on the stock and increased the target price from ₹245 to ₹285. Zomato is still fulfilling its promise of rapid growth and increased profitability, according to Nuvama.
“The business once again performed above expectations in every way. The management has set a goal to raise Blinkit’s dark store count from 639 at the end of Q1FY25 to 2,000 by the end of CY26, with a growth rate of at least 20% in the short term in food delivery, as noted by Nuvama.
Additionally, Motilal Oswal Financial Services, a brokerage firm, kept a buy call on the stock with a target price of ₹300, suggesting a potential upside of 28%.
Zomato’s meal delivery business is steady, according to Motilal, and Blinkit provides a generational chance to take part in the upheaval of sectors like e-commerce, grocery, and retail.
Additionally, Kotak Institutional Equities kept a buy call on the shares and increased the SoTP-based fair value from ₹225 to ₹270.
Due to increased food delivery and Blinkit sales, Kotak increased Zomato’s FY25–27 revenue expectations by over 4-5 percent. However, it reduced EPS (earnings per share) estimates by 7-9 percent because of lower Blinkit near-term profitability.
We appreciate the company’s adept execution in all verticals. Kotak stated that a lower WACC (weighted average cost of capital) assumption of 12.5% is justified by stable food delivery growth and profits.
Although the stock is still a good investment in the long run, some technical experts note that it has recently had significant gains that have moved it into the overbought area. Therefore, some profit booking at this point might be taken into account. Anand Rathi Share and Stock Brokers’ Jigar S. Patel, Senior Manager of Equity Research, noted that Zomato stock had a notable upswing over the previous two months, surpassing all major key moving averages, including the 21-day, 50-day, 100-day, and 200-day exponential moving averages (DEMA).