Should you buy, hold or sell Zomato stock after Swiggy's strong guidance?

Zomato's share price rallied in Wednesday's trade amid global brokerages optimism for the food services aggregator.Even as the food delivery services major Swiggy's Quick Commerce business came out with decent guidance expecting to be adjusted EBITDA positive by FY26 on a consolidated level, global brokerages continue to be positive on Zomato.

On the optimism, the stock of Zomato has risen as much as 2.7 per cent in Wednesday's session (December 4). The stock is showing sideways movement and in the last one month has gained from Rs 245 on November 4 to Rs 287.4- a gain of over 17 per cent from the previous close.

Global brokerages view on Zomato

Hong Kong-based global brokerage CLSA has reiterated its outperform call on the counter with the target pegged revised higher to Rs 370 from the Rs 353. Swiggy during the Septenber quarter logged a 30 per cent year-on-year {(YoY) increase by 30 per cent, whie during the first quarter ended June it gained 23 per cent.

Also, the brokerage highlighted that Swiggy Instamart's- the company's quick commerce segment gross order value (GOV) grew 76 per cent year-on-year, while the same for Zomato's Blinkit grew 122 per cent.

However, Swiggy's QC business logged quarter-on-quarter (QoQ) growth of 24 per cent at par with Blinkit growth at 25 per cent, added CLSA.

Nonetheless, the company's food delivery segment lagged on food delivery services with GOV growth of just 15 per cent year-on-year in the September quarter as against Zomato's growth of 21 per cent.

Sequential improvement though at the 2 new-age companies from the food delivery services was similar with Swiggy's improvement at 6 per cent in contrast to Zomato's growth of 5 per cent. Overall, key conclusion after Swiggy’s results is that gap with Zomato has stopped widening.

However, in the QC segment, there is a considerable gap with Zomato's GOV being larger than Swiggy by as much as 81 per cent.

Morgan Stanley also continues to be overweight on the counter with the target pegged at Rs 355 per share.

Bernstein, meanwhile, is also bullish on the stock with the target of Rs 335 per share.