Should you buy, sell or hold Zomato shares? Here is what JPMorgan suggests

Zomato share price NSE, Zomato share price target, Zomato GST notice news: Zomato shares remained in focus on Friday after JPMorgan maintained an ‘overweight’ call on the stock after the food delivery company received a show-cause notice for an alleged tax liability on Wednesday. The brokerage has placed its target price for the stock at Rs 150, which translates to an upside of 18 per cent from its previous close. Zomato shares on Friday ended 0.41 per cent higher at Rs 123.7 on NSE.

After market hours on Wednesday, Zomato said it had received the notice that required it to show why an alleged tax liability of Rs 401.7 crore along with interest and penalty, for the period from October 29, 2019, to March 31, 2022, should not be demanded from the company. The amount alleged in the notice is based on the amounts collected as delivery charges from the customers on behalf of the delivery partners during the referred period, according to the filing.   

Zomato said it strongly believes that it is not liable to pay any tax since the delivery charge is collected by Zomato on behalf of the delivery partners. The contractual terms and conditions mutually agreed upon, the delivery partners have provided the delivery services to the customers and not the company, it added. 

Zomato would be filing an appropriate response to the notice, the filing read. 

Zomato share price target: What JPMorgan says  

The GST demand could drive one-time hit on Zomato, which can be passed on to customers, the brokerage said in a research report release after the news. 

"Should Zomato be liable for GST eventually? There could be one-time charges for the incidence of this notice and for FY23 and FY24 post March 2022 of Rs 2.9 billion and Rs 2.8 billion, respectively," the brokerage added.

Zomato share price target: What other brokerages say 

Citi reiterated a ‘buy’ rating on Zomato with a target price of Rs 145.   

Zomato share price history 

Zomato's stock has given a positive return of over 100 per cent in the last 12 months (from December 29, 2022). In comparison, the headline index Nifty 50 has rallied over 19 per cent.

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