Multibagger stock: Zomato gains nearly 2% after foreign brokerages maintain 'buy' ratings; check out their targets

Shares of Zomato edged higher on Tuesday (June 25) after global brokerages took a bullish stance on the online delivery platform comparing it with its competitor Swiggy. At the last count, shares of the online food delivery company were up 1.91 per cent at Rs 202.65 apiece. The stock was 1.3 per cent away from its 52-week high of Rs 207.3. 

Why are brokerages bullish on Zomato? 

As per CLSA, Zomato is growing faster than Swiggy. Comparing the financials the analysts at CLSA said Swiggy's annual report for FY24 (Jan to Dec 2023) shows its overall gross order value (GOV) which includes food delivery and quick-commerce grew by 26 per cent year-on-year (YoY) which lagged Zomato’s corresponding growth of 31 per cent during the same period.

Swiggy's overall revenue growth was 24 per cent YoY also lower than Zomato’s adjusted revenue growth of 35 per cent YoY. 

Moreover, Swiggy’s adjusted earnings before interest, tax, amortisation, and depreciation (EBITDA) improved to -US$261m in Jan-Dec 2023 from -US$531m in Jan-Dec 2022. Zomato reported a positive EBITDA of c.US$5m during FY24.

Similarly, UBS said Swiggy's food delivery GOV grew 'Double Digits' with improved advertising and platform fees. Furthermore, its Quick Commerce saw a 'fast' GOV growth with 487 darkstores in 26 cities as against GOV growth of 37 per cent in FY24 where it had 530 darkstores as of March 2024. 

What should investors do? 

CLSA maintained a 'buy' on Zomato for a target of Rs 248 apiece. Similarly, UBS iterated a 'buy' call on the stock and gave a target of Rs 250 apiece. 

On Monday, global brokerage Morgan Stanley retained its ‘overweight’ rating on the counter with a target of Rs 235. Morgan Stanley said there is a probability that the competitive intensity may increase in the segment over the near term with Zepto raising funding. 

Zee Business Managing Editor Anil Singhvi also recommended buying shares of Zomato for targets of Rs 204, Rs 206, and Rs 210, keeping the stop loss at Rs 195. 

Zomato share price: Past performance

In a year, shares of Zomato have given a multi bagger return of over 165 per cent against Nifty50's rise of 25 per cent. 

Catch all the updates of the June 25 session on Dalal Street here.For all other news related to business, politics, tech and auto, visit Zeebiz.com.

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