In a recent update, international brokerage Bernstein has reaffirmed its 'outperform' rating on Zomato, raising its target price from Rs 275 to Rs 330. Bernstein has a positive view on Zomato’s prospects amid the growing quick commerce (QC) sector.
The target price implies an upside of around 13 percent.
Early assumptions believed that QC would only cater to small, high-end purchases in major cities have proven too narrow. Instead, QC is proving popular across various consumer segments and locations, beyond just metro areas and rich customers. These assumptions are revised upwards every quarter.
Bernstein notes that Zomato is central to the quick commerce boom. The company is prioritizing long-term growth and market leadership over immediate profitability.
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Earlier this week, UBS reaffirmed a 'buy' rating on the stock with a target price of Rs 320. The brokerage noted that industry volumes grew by approximately 2.5 percent month-on-month in August 2024, adjusted for the number of days.
The competitive dynamic between Zomato and Swiggy continued into Q2FY25, and UBS estimates Zomato's gross merchandise value (GMV) growth for Q2FY25 at around 7 percent quarter-on-quarter.
Zomato shares have seen a major rally since global JP Morgan raised its target price on the stock to Rs 340 from Rs 208 earlier. It raised its forecasts by 15-41 percent for FY25-27, saying the online food aggregator spearheaded rapid retail consumer transformation via convenience and selection-focused quick commerce.
Zomato was going deeper across all Metros having proven the model in NCR and that its scale should help it drive monetisation from channel margins and ad spending, the brokerage added.
CLSA also recently raised its price target on Zomato to Rs 353 from Rs 350. The stock remains its top pick among India consumers due to its rapid growth and Blinkit’s market share.
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