Morgan Stanley remains overweight on Zomato; says long-term investors can bet on dips

Shares of the new-age company Zomato which ended Friday’s session lower by over 1 per cent started Monday's trade on a muted note after the global brokerage Morgan Stanley retained its ‘overweight’ rating on the counter with a target of Rs 235. The set target implies a probable upside of over 21 per cent.

At the last count at around 9:24 am, shares of the company traded with a minor cut of 0.13 per cent at Rs 193.85 apiece after falling to day's low of Rs 191.85.

The brokerage said Zepto raising funding round increases the relevance of Quick Commerce (QC) channel. On Friday, the company announced that it has raised $665 million in a funding round that has doubled its valuations to $3.6 billion. This fundraise marked the biggest financing this year in the QC segment.

Morgan Stanley said there is a probability that the competitive intensity may increase in the segment over the near term. 

It noted that assuming competitive intensity increases further, a push out of profitability for Quick commerce business versus the current assumptions is possible.

Of late, stock of the food delivery services firm has been in focus after global brokerage have turned bullish on the counter post its confirmation on initial talks with Paytm to acquire its ticketing business.

What Morgan Stanley recommends on Zomato stock?

The brokerage believes any correction could be a buying opportunity for the long-term investors. Further among the internet stocks, the brokerage sees Zomato and PB Fintech to be placed ahead of others. The brokerage on the entire India Internet basket said that it remains constructive despite a sharp re-rating.