Shares of Zomato gained over 3 percent on September 12 to trade slightly below the record high after 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.
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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.
On the technical front, Zomato is in a strong uptrend where it is breaking out of Flag formation. It created a strong base around their breakout level at Rs 240. Pravesh Gour, Senior Technical Analyst at Swastika Investmart has recommended investors hold the stock with a price target of Rs 280-300 with a stop loss of Rs 240.
The immediate resistance for Zomato was seen as Rs 280, which has been breached already. Above this, the stock is likely to head towards Rs 300 level, Gaur said, adding that on the downside, Rs 240 is major support at any correction, while Rs 220 is the next critical demand level. "MACD and RSI are supporting the strength of the current movement," he added.
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At 10:03 am, Zomato shares were trading 1.5 percent higher at Rs 275.55 on the National Stock Exchange (NSE). The multibagger stock has rallied over 123 percent so far this year, outperforming Nifty's returns of 14 percent.
In the past 12 months, the counter has risen around 179 percent, more than doubling investors' capital. In comparison, Nifty rose 28 percent during this period.
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