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CLSA maintained its “outperform” rating on the stock and raised its price target to ₹400 from ₹370 earlier. This is also the first instance of Zomato getting a ₹400 target, which also makes it the highest on the street for the Deepinder Goyal-led company.
The brokerage wrote in its note that the recent correction in Zomato’s stock price from its peak is a great opportunity to enter the stock. Shares of Zomato have corrected over 25% from their recent peak of ₹304, with most of that fall coming since the start of the year.
CLSA believes that the entire quick commerce profit pool will expand rapidly over the next three years and as a result, it is expecting Zomato’s revenue to grow at a Compounded Annual Growth Rate (CAGR) of 51% over financial year 2024 to 2027.
At the same time, CLSA also expects to deliver an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) CAGR of 502% over the same time frame.
However, Zomato’s December quarter quick commerce margins are likely to be soft, according to CLSA, but that is largely likely to be a function of faster expansion of Blinkit, the note said.
Out of the 28 analysts that have coverage on Zomato, 24 of them have a “buy” rating, three of them have a “sell” recommendation, while the other one has a “neutral” rating on the stock.
Shares of Zomato had ended 5.2% higher on Wednesday, extending its gains for the second day in a row. Prior to that, the stock was on a seven-session losing streak, during which it had corrected 20%.
