Zomato: The gross order value (GOV) of food delivery – representing the total value of all orders – recorded an annual growth of 25%, and the company plans to continue to grow GOV by more than 20% annually, and Perhaps even faster growth may occur if there is further market share growth and revival in macro consumer demand.
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Zomato shares ended up 2.42% after Q3 results announcement on Friday. Foreign brokerage Jefferies said Zomato’s Q3FY24 was another strong quarter, with exceptional performance in Q/C and smart margin gains in food delivery. Admit that growth here could have been better, but the result is understandable in the context of weakness in consumption segments.
This raises leveraged EBITDA estimates by 4-10%. In its rationale, Jefferies Finance expects a CAGR of ~25% in delivery revenues over FY23-26E. It expects unit economics to gradually improve with scale as Zomato opens up share costings and as customer readiness to pay for convenience increases.
It maintains a ‘buy’ rating on its stock and raises the target price to above ₹190 from ₹205 per share. Analysts at Emkay Global Financial Services said Zomato posted another quarterly performance with growth across all segments of the market. “GOV of food delivery here grew by 6.3% QoQ but did not meet our/the company’s expectations due to subdued demand environment.
Food delivery contribution margin expanded to 7.1%, supported by ad-monetization and platform fees. Blinkit with its excellent strategy has delivered GOV with QoQ growth of 28% and further reduction in loss of people.
Zomato share price history
The Zomato section is part of the S&P BSE 100. According to BSE analysis, its shares have risen nearly 20 per cent on a YTD basis and 22 per cent in three months. Shares have soared 58 per cent in the last six months while the S&P BSE Consumer Discretion has gained 22 per cent. Zomato shares have delivered a massive gain of 174 per cent in the last one year, giving investors wealth, as per Explained by analysis.
Zomato share price target 2024
Several brokerage firms have recommended buy on Zomato shares after its stellar results for October-December quarter of FY24. Leading brokerage firm Macquarie has maintained the so-called underperform rating and set the target price at Rs 76.
“Stable margin improvement and robust commercial growth have been witnessed,” he said. However, food delivery showed only +2 per cent of monthly transaction users (MTU). We maintain our cautious view as the current share prices take into account the 10-year revenue CAGR of 25-35 per cent and the establishment of a sustainable duopoly primarily based on the rise of ONDC (Open Network for Digital Commercial Trading). Despite this, the market has acknowledged Zomato’s work over the past year. “The stock is now trading at our fundamental blue-sky valuation.”
In Conclusion:
In conclusion, Zomato’s recent triumph epitomizes its resilience, adaptability, and unwavering commitment to excellence in the face of adversity. Armed with strategic foresight and a penchant for innovation, Zomato is poised to chart new heights and redefine the food delivery landscape. As investors and enthusiasts alike await the unfolding chapters of its success story, one thing remains certain: Zomato’s journey is far from over.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any securities mentioned. Investing in stocks carries inherent risks, and individuals should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author and publisher of this article do not guarantee the accuracy or completeness of the information provided, and shall not be held liable for any errors, omissions, or investment losses arising from the use of this information. All opinions expressed herein are subject to change without notice.
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