Zomato stock may gain upward momentum as major brokerages revise targets post-Q2 earnings; CLSA sees 45% potential gains
Zomatos stock has skyrocketed 135 percent in the last year, significantly outperforming the Niftys 28% rise, offering investors remarkable returns and solidifying its position as a market favorite.
Zomato's board of directors approved a proposal on Tuesday to raise Rs 8,500 crore through the issuance of equity shares via the qualified institutional placement (QIP) route. The announcement came alongside the company’s Q2FY25 earnings, where Zomato reported a 389 per cent surge in consolidated net profit to Rs 176 crore for the quarter ending September 2024, compared to Rs 36 crore a year ago.
Despite the strong results, Zomato shares closed at Rs 256.55 on the NSE, down 3.44 per cent.
Zomato shares, currently priced at Rs 256, have gained traction among leading brokerages, many of which have raised their price targets, reflecting growing confidence in the company’s growth potential. CLSA has reiterated its "Outperform" rating, boosting its target to Rs 370 from Rs 353, citing Zomato’s ability to expand its market presence in the highly competitive food delivery industry.
Nomura has similarly revised its target from Rs 280 to Rs 320 while maintaining a "Buy" recommendation, highlighting optimism over the company’s long-term prospects. Citi echoed this sentiment, reaffirming its "Buy" stance and slightly raising its target to Rs 310 from Rs 300. Goldman Sachs followed suit, revising its target from Rs 280 to Rs 315, supported by expectations of continued growth in the company’s user base and order volumes.
Jefferies has also maintained a "Buy" rating, setting its target at Rs 335, while JP Morgan is even more bullish, increasing its price target to Rs 340 and maintaining an "Overweight" rating. HSBC, too, raised its target to Rs 330 while upholding a "Buy" recommendation.
However, there are some differing opinions. Morgan Stanley maintained an "Overweight" rating with a more conservative price target of Rs 278. Macquarie stood out with a contrarian view, holding its "Underperform" rating and a significantly lower target of Rs 100, reflecting a more cautious outlook on Zomato's near-term performance.
The broad range of upward revisions signals growing market confidence in Zomato’s ability to navigate challenges in the food delivery space while continuing its upward trajectory.
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