Zomato shares clock 52-week high after food delivery firm posts Rs 138 crore Q3 profit

Zomato shares jumped to a 52-week high on Friday after the food delivery company reported a net profit for the October-December period. The Zomato stock gained as much as 4.3 per cent to Rs 150.3 apiece in early deals on BSE, surpassing the existing 52-week high of Rs 147.5 apiece registered the previous day.

At 9:17 am, Zomato shares were up 3.8 per cent at Rs 149.4 apiece on the bourse.

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 for the corresponding period a year ago.

Its revenue from operations grew 69 per cent on a year-on-year basis to Rs 3,288 crore for the fiscal third quarter, according to a regulatory filing.

Strong growth in the food delivery and hyper-pure units aided Zomato’s profitability in the three-month period.

Brokerages view on the stock after Q3 show

Global brokerage Jefferies maintained a buy on the stock with a target price of Rs 205 as against the earlier target set at Rs 190. As per Jefferies, the company delivered strong 3Q with exceptional performance in quick commerce and smart margin gains in the food delivery business. The brokerage raised its FY24-26 adj Ebitda est. by 4-10%.

Nomura upgraded the counter to a ‘buy’ from the previous ‘reduce’ call with the target raised to Rs 180 from Rs 75. The brokerage said the target implies 50x FY26F EV/EBITDA multiple, which is justified given the nascent stage of the business & huge growth potential.

CLSA has also reiterated its ‘buy’ stance on the counter. For the brokerage, Zomato posted robust EBITA and PAT beat. The target has been increased to Rs 181 as against Rs 168. The brokerage stated that despite the poor market, the company is gaining share. Also, outlook remains positive, with management raising near-term growth expectations closer to 50% than 40% previously.

HSBC also continued with its ‘buy’ view on the stock with a raised target of Rs 163. In the view of HSBC, the company’s food delivery and quick commerce businesses performed better than its expectations. Further, it anticipates normalization in the food delivery growth going forward.

Morgan Stanley also maintained its ‘overweight’ stance with a target of Rs 150 as the company’s Q3 beat was on account of operating profits as well as good cash generation. The adjusted EBITDA came in at Rs 1.25 billion in comparison to Morgan Stanley’s estimates of Rs 0.9 billion. Also, company’s cash balance surged sharply sequentially to Rs 1200 crore as against Rs 250 crore in the September-ended quarter.

JM Financial maintains a high conviction buy on the stock with a 12-month target price of Rs 200. The brokerage held that continued strong operating performance in both the company’s food delivery as well Blinkit businesses should keep the stock buoyant in the near term.