Zomato shares rally on home-style food service launch; Morgan Stanley is Overweight, recommends buy

Food delivery services platform Zomato Limited has launched home-made food service ‘Everyday’ at just Rs 89. The company claims to be offering fresh home-style meals at affordable prices. On Wednesday, Founder and Chief Executive Officer Deepinder Goyal tweeted to inform about the launch. 

“Introducing Zomato Everyday - experience the comfort of affordable homely meals delivered to your doorsteps. With menus designed by real home chefs, we hope this reminds you a little of your home,” the tweet said. 

Introducing Zomato Everyday - experience the comfort of affordable homely meals delivered to your doorsteps.

With menus designed by real home chefs, we hope this reminds you a little of your home. 

Read more here: https://t.co/y3FzSFBETE#ZomatoEveryday

— Deepinder Goyal (@deepigoyal) February 22, 2023

Zomato shares were trading at Rs 55.80 on the NSE at 12 pm and were up by Rs 0.85 or 1.55 per cent from the Monday closing price. This is the second successive gain for the stock since the launch of the service, couple of days back. 

Zee Business’ Varun Dubey brings this report.  

The service has been launched to offer people home-made food and the company has tied-up with chefs who provide home-cooked food.  

People can visit Zomato app to avail of this service. The service is open between 8:30 am and 3:30 pm and is available only in Gurgaon as of now and not countrywide. The base price is just Rs 89 and the customers can customise the order as per their requirements.  

The breakfast service will be available between 8:30 am and 11:30 am while the lunch will be available from 11:30 am to 3:30 pm. 

Brokerage firm Morgan Stanley has given an ‘Overweight’ rating to the counter for a price target of Rs 82. It said that the service launch should be seen as an experiment which could be discontinued if it does not work. Meanwhile, Citi has put the target at Rs 76.  

The research also pointed out that the experiment may increase its total addressable market but the profit pool could take a dent. The rationale is food available at cheaper prices. 

People who have used this service in Gurgaon have said that the food is delivered within 10-15 minutes.  

Zee Business Managing Editor said that the attempt is to institutionalize tiffin service and there is now an ecommerce platform for that. 

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Market Expert Ambareesh Baliga opines that the service may be successful as customers may continue ordering food from Zomato on a daily basis.