Zomato shares have seen consistent gains for three days following an unprecedented block deal which saw 1.5 crore shares or 0.2 percent of equity worth Rs 88.2 cr exchange hands at an average share price of Rs.59.1.
Zomato stock closed at Rs 64.50 each for an increase of 6.26 percent; monthly gains stood at 25.85 percent while year-to-date performance dropped 10 percent. Zomato has an estimated market capitalization of Rs 54,102 Crore. Today, Zomato also broke its 200-Day Exponential Moving Average of Rs 62.34
Analysts see a significant upside from here, especially after it’s Q4 results.
Motilal Oswal analysts anticipate that Zomato will experience a 29 percent compound annual growth rate over FY23-25 in revenue.
Motilal Oswal initiated coverage in January with an “outperform” rating and target price of Rs 70 for this stock. They anticipate profitability within five years despite high competition levels.
Since Amazon’s departure, the food delivery industry is now dominated by two companies: Zomato (55% market share) and Swiggy (45%). Market analysis indicated that due to high capital requirements to replace incumbents, this market possessed an excellent moat.
Zomato Q4FY23 preview
Zomato will report a revenue CAGR of 29 percent over the FY23-25 period, fueled by increased penetration, a higher proportion of transacting users, and an increase in ordering frequency.
Zomato Gold will not affect food delivery GOV in Q4FY23E (+14.2% YoY), despite activation.
Analysts at ICICI Securities said that the slowdown in the growth of GOV was due to post-Diwali consumer fatigue and a shift from online to offline shopping.
The brokerage has maintained a “Buy” rating for Zomato based on DCF and a target price of 65 rupees.
CMP stated that “we acknowledge that further growth slowdown poses a risk for our FY24E/FY25E estimations, but we believe, at CMP the risk-reward remains skewed towards the upside.”