Zomato, a leading player in the food delivery sector, saw its stock rise by up to 2.5% to reach a 52-week peak of INR 138 per share on the BSE during Thursday’s trading session.
This comes after the global brokerage firm HSBC, while upholding its ‘buy’ rating on Zomato, raised its target for the stock by INR 10 to INR 150 per share.
Despite projecting subdued growth in the calendar year 2024, HSBC analysts expressed a positive long-term outlook for Zomato, maintaining a constructive view.
Meanwhile, Elara Securities analysts have issued a “buy” recommendation on Zomato. This endorsement comes on the heels of the foodtech giant’s decision to increase its platform fee for food delivery services by 33%, moving it up from INR 3 to INR 4 per order. The analysts have set a target price of INR 150, signaling confidence in Zomato’s prospects.
Continue Exploring: Zomato raises platform fee to INR 4 per order in major cities
“We believe the uptick in convenience fee per order will play an important role in improving adjusted Ebitda of Zomato’s food delivery, which stood at INR 2,040 Mn in Q2FY24. The total number of orders for the food delivery business stood at 650mn in FY23; we expect orders to reach 830 Mn in FY25E and 940 Mn in FY26E,” the brokerage firm said.
It further added that the company’s profitability in the food-delivery sector will be driven by increased convenience fees, advertising income, and restaurant commissions.
As of 12:23 PM on Thursday, Zomato’s stocks were being traded at INR 137 each on BSE, reflecting a slight increase from the previous close of INR 134.
The stock of the prominent foodtech company saw its value more than double last year. Starting in the INR 50-60 range in the initial month of 2023, it concluded the year at a value above INR 120.
Zomato’s Profitability Soars with Consecutive Profitable Quarters
Zomato has recently been prioritizing its profitability. The startup disclosed its second consecutive profitable quarter, witnessing a notable surge in profit after tax to INR 36 Cr in the September quarter of the financial year 2023-24 (FY24). This marked an 18-fold increase from the PAT of INR 2 Cr in the previous quarter.
Meanwhile, Zomato and Swiggy, the duo, have reportedly received notices for a cumulative Goods and Services Tax (GST) worth around INR 1,000 Cr. This tax is levied at 18% on the total amount collected by them as delivery fees since they commenced offering food delivery services.
Continue Exploring: Zomato and Swiggy grapple with INR 1,000 Cr GST notices as tax authorities include delivery charges in revenue assessment