Zomato share price jumps nearly 18% post Q1 results, gains 30% in 5 days; brokerages see huge return in food delivery firm stock- Check TPs

Shares of Zomato rose over 17% in Tuesday's intraday trade after the food aggregator company's consolidated net loss almost halved to Rs 186 crore in the April-June quarter against a net loss of Rs 360.7 crore in the same quarter of the previous year. Meanwhile, the company's total income jumped to Rs 1,582 crore in Q1FY23 against Rs 916.6 crore in the corresponding period of last year, as per a regulatory filing of the company.  

Reacting to improved numbers, Shares of Zomato jumped 17.58% to Rs 54.50 a share on the BSE in Tuesday's intraday trade. In the last five trading sessions, the stock has clocked over 30% return from its 5-day low value of Rs 42 per share on July 27.  

Meanwhile, brokerages see up to 150% upside in online food delivery platform stock on its Monday's closing price of Rs 46 per share on the BSE.  

Morgan Stanley maintained an overweight rating on Zomato with a target price of Rs 80 per share. It said Q1 was a good quality beat, driven by healthy increase in monthly transacting users (MTUs), improving average order value and better monetisation. Besides, it also witnessed a break-even at segment level for food delivery. It feels sustained and steady execution over coming quarters will be key for re-rating.  

Jefferies gave a target price of Rs 100 and maintained a buy call on the counter. It said from an exuberance at the time of listing last year, Zomato is now unloved, having underperformed peers ytd. Blinkit acquisition firther elongates path to profitability and despite management guidance on a break-even in food delivery, investors are not giving much benefit of doubt, it observed.  

However, the brokerage was of the view the sharp correction in Zomato share price offers opportunity.  

"This is justified in the context of long growth run-way along with higher explicit medium-term forecasts on GMV (30% for Zomato vs. 10-20% for peers). We also see a consistent improvement in profitability in food delivery despite strong 30% Cagr over FY22-25E ahead of global/regional peers," it added.  

Meanwhile, the most aggressive target of all was given by JP Morgan, which sees Zomato share price hitting a target price of Rs 115, which is an upside of 150% on previous closing price of Rs 46 per share. The brokerage maintained an overweight stance on the counter.  

Credit Suisse maintained an outperform rating on the stock with a target price of Rs 90.