Zomato share price: After brokerage firm Morgan Stanley gave a positive outlook on Zomato, the stock of the food delivery firm ended on a high note on Monday (August 28), rising 1.39 per cent to close at Rs 92.20 amid bullish sentiment in the market.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The brokerage firm spoke highly of Zomato's decision to roll out a platform fee of Rs 2/order across all cities.

Morgan Stanley said that the platform fee would improve the profitability of the food delivery segment.

The brokerage firm highlighted the company's positive numbers in the first quarter, where it delivered a contribution margin of 6.4 per cent.

The company's EBIDTA margin in the food delivery segment was 2.5 per cent. 

Morgan Stanley said in its outlook for the company for the financial year 2026 that its EBIDTA margin in food delivery is expected to be 4 per cent.

The brokerage firm said that the EBIDTA margin in the same category for the financial year 2027 is expected to be 4.7 per cent higher.

Morgan Stanley expected the company to grow at 40 per cent year-on-year for at least the next two years.

It estimates the company's acquired food delivery business, Blinkit, to turn profitable in the next four quarters at the adjusted EBIDTA level.

While it predicts employee costs to increase at the rate of inflation, Morgan Stanley also estimates a 60 per cent gross order value (GOV) growth in Blinkit.

How other brokerages rate Zomato

Morgan Stanley and Citi have given a target price of Rs 115 each for Zomato, while Jefferies' target price for the company's share is Rs 130.

CLSA and HSBC have target prices of Rs 105 and Rs 102, respectively, for Zomato's share.

Zomato Q4 results

Zomato Ltd in early August announced its Q1 FY24 results, reporting its first-ever consolidated profit after tax of Rs 2 crore, driven by strong revenue growth.

The company posted a net loss of Rs 186 crore in the same quarter of FY23.

Its consolidated revenue from operations in the first quarter of the current fiscal was Rs 2,416 crore, as against Rs 1,414 crore in the year-ago period.

Total expenses were higher at Rs 2,612 crore as against Rs 1,768 crore in the same quarter a year ago.

Brokerage                     Target
Jefferies                          130
Morgan Stanley              115
Citi                                   115
CLSA                               105
HSBC                              102