(CTN News) – Online meal delivery startup Zomato Ltd.’s June quarter results were substantially better than expected in a number of areas.
By the end of the 26th fiscal year, Zomato’s management hopes to have increased Blinkit’s dark store count from 639 at the end of the June quarter to 2,000.
Additionally, they have set a goal growth rate for the Food Delivery (FD) company in the short term of at least twenty percent. When the company’s first-quarter earnings are announced, market analysts are normally bullish about the stock and believe it could rise as much as fifty percent on the counter.
Nomura India predicts that Zomato would eventually strike a balance between its projected growth and profit margins. Zomato’s medium-term objective of attaining an adjusted EBITDA margin of 4-5 percent in the FD segment is not expected to be jeopardised, according to the international broking.
Nomura India projects that foreign direct investment gross order value (GOV) will expand by 20–23 percent in FY25–26, with a contribution margin of 7.5%. This represents a 60 basis point increase from FY24.
In Q-commerce and FD, Zomato can increase profitability.
In light of Blinkit’s strong long-term growth, we have lifted our target price to Rs 280. We therefore see 26-60% growth in EBITDA for FY25–26F.
According to the research, two major issues are the use of $1.5 billion in cash for capital and a halt in the growth of businesses in the FD and Q-commerce sectors.
Blinkit is infamous for defying attempts to fairly evaluate the company, according to MOFSL, because of its relentless expansion and the disruptive and always evolving nature of fast commerce.
Furthermore, the firm believes that the primary factor influencing variation for a DCF-based price estimate is Blinkit’s gross order value (GOV). This is due to the fact that its GOV grew by more than 100% annually.
Zomato should report a profit margin of 4% for the fiscal year 25 and 8.7% for the fiscal year 26 and thereafter, according to MOFSL. According to Zomato, Blinkit offers a generational opportunity to participate in the disruption of sectors like retail, supermarkets, and e-commerce. Blinkit provides this possibility, and Zomato’s meal delivery business is reliable.
Our DCF-based value, which comes in at Rs 300, indicates a possible upside of 25% above the current price. MOFSL states that “We continue to maintain our BUY rating on the stock.”
Zomato is profitable and growing rapidly, Nuvama says.
Management’s stated goal of adding 2,000 dark stores by 2026 was used as proof that they are not scaling back on their present level of growth aspirations. At present, this broker is valuing food delivery at $14 billion, whereas Blinkit is valued at $13 billion.
It said in its announcement to “maintain ‘BUY’ with a revised target of Rs 285 (earlier Rs 245) based on a valuation rollover to Sep-26E.”
JM Financial’s management has noted that employee costs, which include ESOPs, may drop to between 6 and 8 percent of adjusted revenue in FY26, compared to 12 percent in FY24, despite the fact that ESOPs would see a slight increase in the near future.
During the fiscal year 25–27, we expect to earn 2–15 percent more, and we have raised our target price for September 25 to 260 rupees from 230 rupees. “Retain the ‘BUY’ stance,” the broker suggested.
It has been claimed that CLSA has raised its target price to Rs 350 per share and, like other brokerages, has maintained a ‘Buy’ position on Zomato.
The stock is valued at 280 rupees according to Citi and Goldman Sachs, however UBS has recommended that the stock’s target price be set at 260 rupees per share. The target price per share for each of the following is set by Jefferies at Rs 275, Morgan Stanley at Rs 278, and Axis Securities at Rs 287.
SOURCE: BTN
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