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Business News/ Markets / Stock Markets/  Zomato share price hits 52-week high, up 225% from its 52-week low; CLSA, Geojit, Motilal Oswal say buy it
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Zomato share price hits 52-week high, up 225% from its 52-week low; CLSA, Geojit, Motilal Oswal say buy it

Zomato share price has surged over 200 per cent in the last one year against a nearly 17 per cent gain in the equity benchmark Sensex.

Zomato share price hit its 52-week low of ₹49 on March 28 last year. At the current market price of ₹159.20, the stock has surged 225 per cent from its 52-week low level. (Image: Pixabay) (Pixabay)Premium
Zomato share price hit its 52-week low of 49 on March 28 last year. At the current market price of 159.20, the stock has surged 225 per cent from its 52-week low level. (Image: Pixabay) (Pixabay)

Zomato share price jumped almost 5 per cent to hit its fresh 52-week high in intraday trade on BSE on Thursday, February 15. Zomato share price opened at 156.75 against the previous close of 152.20 and jumped 4.6 per cent to hit a fresh 52-week high of 159.20 on the BSE.

Zomato share price has surged over 200 per cent in the last one year against a nearly 17 per cent gain in the equity benchmark Sensex.

The stock hit its 52-week low of 49 on March 28 last year. At the current market price of 159.20, the stock has surged 225 per cent from its 52-week low level.

Several brokerage firms are positive about the stock. 

Global brokerage firm CLSA raised its target price from 181 to 227 while maintaining a buy call.

CLSA said that even though the company is small, it is an increasingly indispensable part of the profit pool. CLSA believe that the recent Q3 results show the path to stable profitability.

The brokerage firm expects a 45 per cent upside in the stock price, even if the base case for food delivery does not play out.

“Even in a slower growth scenario for food delivery, with no Zomato Everyday launch, we see FY26 EPS of 5.36, 9 per cent lower than our base case but still 45 per cent upside on our PE-based valuation," said CLSA.

"We move our blended valuation to DCF and a FY26 based PE to align with our consumer/QSR methodology as we believe food delivery and quick commerce are now on a stable profitability path," said CLSA.

"We believe benchmarking its valuation with Indian QSRs and our consumer coverage is better given similar growth drivers and profit pool. Comparing with global peers is more complex given different drivers and large valuation ranges within a limited set," said CLSA.

"We lower our FY24 PAT estimate to 430 crore but our FY25-26 estimates by less than 1 per cent to reflect changes in our other income, tax and Ebitda assumptions," said CLSA.

Also Read: Paytm, Nykaa, PB Fintech among new-age tech stocks trading below IPO price, Zomato outlier

For Q3FY24, Zomato reported a consolidated net profit of 138 crore, compared to a net loss of 347 crore in the year-ago period. Its revenue from operations in the third quarter of the current fiscal came in at 3,288 crore, registering a growth of 69 per cent, compared to 1,948 crore in the year-ago period.

Also Read: Zomato Q3 Results: Net profit at 138 crore, revenue up 69% YoY; 5 key highlights

Domestic brokerage firm Geojit Financial Services reiterated a buy rating on the stock after the company's December quarter earnings, with a rolled-forward target price of 174, based on 7 times FY26E price/sales.

"Despite muted consumer discretionary demand in Q3FY24, the food delivery business recorded solid growth. Despite muted consumer demand, the food delivery business recorded healthy growth. A strong growth momentum in the segments, a positive margin, and a leading market position are expected to support superior performance," said Geojit.

Motilal Oswal Financial Services also maintained a buy call on Zomato with a target price of 170 after the food delivery firm's Q3 earnings.

"The food delivery business is still in a nascent stage in India, with a long runway for growth. With a dominant market share and strong growth in the food delivery business and Hyperpure, we expect Zomato to report a strong 38 per cent adjusted revenue CAGR over FY24-26," Motilal said.

"After turning positive at the margin level in Q3, we now estimate Zomato to deliver 4.5 per cent and 10 per cent EBITDA margin in FY25E and FY26E respectively. We value the business using a DCF methodology, assuming a 5 per cent terminal growth rate and 11.5 per cent cost of capital," said Motilal Oswal.

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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 15 Feb 2024, 12:28 PM IST
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