Zomato stock may move higher as major retailers revise targets after Q2 show; CLSA sees gains of around 45 percent
Zomato’s board of directors approved a proposal on Tuesday to raise Rs 8,500 crore through the issue of equity shares through the qualified institutional placement (QIP) route. The announcement came alongside the company’s Q2FY25 earnings, where Zomato reported a 389% increase in consolidated profit to Rs 176 crore for the quarter ending September 2024, compared to Rs 36 crore last year.
Despite the strong results, shares of Zomato closed at Rs 256.55 on the NSE, down 3.44%.
Shares of Zomato, currently priced at Rs 256, have gained traction among leading brokerages, many of which have raised their prices, reflecting growing confidence in the company’s growth potential. CLSA has reiterated its “Outperform” rating, raising its target to Rs 370 from Rs 353, citing Zomato’s ability to expand its market presence in the highly competitive food delivery industry.
Nomura also revised its target from Rs 280 to Rs 320 while maintaining a “Buy” recommendation, highlighting optimism over the company’s long-term prospects. Citi echoed the sentiment, reaffirming its “Buy” stance and marginally raising its target to Rs 310 from Rs 300. Goldman Sachs followed suit, revising its target from Rs 280 to Rs 315, supported by the expected continuous growth in the company’s users and order volumes.
Jefferies also maintained a “Buy” rating, setting the target at Rs 335, while JP Morgan is even more bullish, raising its price target to Rs 340 and maintaining an “Overweight” rating. HSBC, too, raised its target to Rs 330 while maintaining a “Buy” recommendation.
However, there are different opinions. Morgan Stanley maintained an “overweight” rating with a price target of Rs 278. Macquarie took a contrasting view, retaining its “Underperform” rating and a very low target of Rs 100, indicating a more cautious view on Zomato’s near term – term performance.
The wide array of upward revisions reflects the market’s growing confidence in Zomato’s ability to address challenges in the food delivery space while continuing its upward trajectory.
