Zomato stock zooms 19% to record high after robust Q1 results, m-cap tops Rs 2.5 lakh crore

Zomato's food delivery business is stable, and according to analysts at Motilal Oswal, Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery and e-commerce.

Shares of Zomato zoomed around 19 percent to hit a record high of Rs 278.70 on August 2 as investors cheered the food aggregator firm's stellar earnings for the quarter ended June 2024, with all segments registering healthy growth.

Zomato reported a multifold rise in its net profit at Rs 253 crore in Q1FY25, up 12,550 percent on an year-on-year (YoY) basis. Its revenue from operations surged 75 percent YoY to Rs 4,206 crore.

Brokerages remain bullish on Zomato and have raised the target price on the stock. Zomato's food delivery business is stable, and according to analysts at Motilal Oswal, Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery and e-commerce.

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The brokerage reiterated its buy rating on the stock with a DCF-based target price of Rs 300. "We value the business using a DCF methodology, assuming 12.5% cost of capital," it said.

At 12:19 pm, Zomato shares were trading nearly 12 percent higher at Rs 260.78 on the National Stock Exchange (NSE). The firm's market capitalisation (m-cap) crosses Rs 2.5 lakh crore mark briefly.

During the quarter under review, Zomato's Ebitda came in at Rs 177 crore, which was an Ebitda loss of Rs 48 crore in the corresponding quarter of the previous fiscal. Margins for the Q1FY25 stood at 4.21 percent. Gross order value (GOV) of B2C business grew 53 percent YoY to Rs 15,455 crore for the quarter.

Axis Securities has initiated coverage on Zomato with a 'buy' rating and a target price of Rs 280, implying 19 percent upside from the previous closing price of Rs 234 per share. The brokerage expects Zomato to strengthen its presence in the food-delivery market and gain market share through its continuous adoption of new technology and bringing new innovations in the food-delivery business. "This will continue to drive more number of users to the platform," it said.

Zomato's food delivery gross order value (GOC) growth remained robust at 27 percent YoY, and Blinkit continued tracking its sturdy growth path with GOV up 130 percent YoY to Rs 4,920 crore. For Food Delivery, the management sees GOV growth sustaining at over 20 percent in the near term, slightly lower than that in the last couple of quarters.

According to Emkay Global, Blinkit's stellar growth is complemented by continued improvements in profitability, where it sustained adjusted EBITDA breakeven despite investing in new stores. The management now targets a store-count of 2,000 for Blinkit by 2026, as it continues its expansion spree for seizing market opportunities.

Zomato has also announced its intention of building a one-stop destination app called District and sees this as its third-largest B2C business.

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Analysts at Emkay revised their FY25-27 EPS estimates by -2 percent to 4 percent, factoring in the Q1 performance and the aggressive store expansion plans for Blinkit. The brokerage maintained a 'buy' rating on the stock and raised the target price to Rs 270 per share.

So far this year, Zomato stock has zoomed 105 percent, more then doubling investors' money. In comparison, benchmark Nifty 50 rose 14 percent during this period.

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