Onwards and upwards! CLSA sees over 49% upside in Zomato; stock hits 52-week high

Shares of Zomato gained over 4 per cent in morning deals on Thursday (February 15) and clocked a 52-week high of Rs 159.2 apiece on the BSE. The stock rallied after CLSA raised its target price on the food delivery platform with a buy rating.

At around 12:38 p.m., shares of Zomato traded 3.15 per cent, or Rs 4.8, higher at Rs 157 apiece. The market capitalisation of the company at around the same time stood at Rs 1,38,558.80 crore.

CLSA sees a nearly 49.1 per cent upside in Zomato when compared to Tuesday's closing of Rs 152.2 apiece. As per the brokerage, the company is small but has an increasingly indispensable part of the profit pool, and Q3 results show the path to stable profitability. 

The brokerage sees significant upside, even if the base case for food delivery does not play out. 

CLSA has maintained a 'buy' stance on the stock and raised the target price to Rs 227 from Rs 181.

Along similar lines, Geojit Financial Services has given a 'buy' call on the stock with a target price of Rs 174 apiece. 

"Performance continued to be solid. Despite muted consumer demand, the food delivery business recorded healthy growth. Strong growth momentum in the segments, a positive margin, and a leading market position are expected to support superior performance," the report read. 

How did Zomato perform in Q3? 

Zomato reported a consolidated net profit of Rs 138 crore for the quarter ended December 31, 2023, as against a consolidated net loss of Rs 347 crore in the corresponding quarter of the previous fiscal.

Its revenue from operations grew 69 per cent on a year-on-year basis to Rs 3,288 crore for the third quarter, up from Rs 1,948 crore in the year-ago period. Strong growth in food delivery and hyper-pure units aided Zomato’s profitability in the three months.

Zomato share price: Past performance 

In a year, shares of Zomato have risen over 213 per cent, outperforming the Nifty 50's rise of 21 per cent.

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