Shares of Zomato gained over 2 percent on August 23 after Citi raised the target price to Rs 300 per share. The revision comes after Zomato announced that it will acquire Paytm's entertainment and ticketing business for Rs 2,048 crore.
Analysts at Citi view the acquisition as 'moderately positive', noting that Zomato's own 'Going Out' vertical has experienced higher growth compared to the acquired business. The brokerage expects Zomato's focus to be on gaining market share in this segment, aligning with its growth and margin guidance.
Citi has maintained its 'buy' rating on the stock. Earlier, several other brokerages also raised their target prices, highlighting the acquisition's potential to expand Zomato's total addressable market (TAM), enhance growth, and compete against market leaders like BookMyShow.
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Zomato's management believes that the food aggregator's going-out business will continue to see strong growth, with overall growth in lifestyle and consumption. Post-acquisition, the management estimates going-out gross order value (GOV) at over Rs 10,000 crore in FY26.
It also expects the going-out business to operate near break-even on adjusted EBITDA basis, while potentially delivering a 4-5 percent adjusted EBITDA margin as a percentage of the GOV over the medium-to-long term. Zomato's strong execution track record grants confidence that going out will add further value over the long term, said Emkay Global.
At 9:52 am, Zomato shares were trading over 2.6 percent higher at Rs 264.87 on the National Stock Exchange (NSE). So far this year, the stock has rallied 113 percent, massively outpacing benchmark Nifty's returns of around 14 percent during this period.
In the 12 months gone by, the counter has rallied 182, multiplying investors' capital nearly 3 times. In comparison, Nifty delivered returns of around 27 percent during this period.
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