According to reports, Christopher Wood, the global head of equity strategy at Jefferies brokerage firm, is said to be planning to further increase his investment in Zomato, the Indian foodtech giant, by an additional percentage point.
The recent development follows Christopher Wood’s inclusion of Zomato in his portfolios approximately a month ago. As per a CNBC-TV18 report, Wood’s decision to invest in Zomato will be preceded by a reduction in his stake in the state-run petroleum giant ONGC.
In May, Wood’s Greed & Fear made an investment in Zomato, allocating a 4% weightage in the India long-only portfolio. This investment replaced HDFC Life, which was subsequently removed from the portfolio.
By reallocating investments from Chinese stakes Alibaba and JD.com, Greed & Fear’s global long-only portfolio assigned a 4% weightage to Zomato.
Zomato’s share price has attracted attention due to its recent rally. On June 30th, Friday, the company’s shares opened at INR 75 each, slightly below its IPO price of INR 76.
For the first time since April 2022, Zomato’s shares have surpassed their IPO price, reaching a 52-week high of INR 80.30. Since June 30th, 2022, the foodtech giant’s shares have experienced a remarkable rally, with an increase of over 39%. As a result, brokerage firms have expressed optimism regarding Zomato’s shares.
In a recent report, Kotak Institutional Equities suggested that Zomato has a higher market share in terms of Gross Merchandise Value (GMV), with a split of 55-45 in its favor. This indicates strong operational performance and customer loyalty, despite a reduction in discounts offered on the platform. Additionally, Citi acknowledged that Zomato is currently more profitable than Swiggy, positioning it ahead in terms of financial sustainability.
Citi continues to advocate a ‘Buy’ recommendation on Zomato, setting a price target of INR 84 per share. Similarly, Kotak has reaffirmed its ‘Buy’ rating on Zomato, with a price target of INR 95.
According to JM Financial, a brokerage firm, Zomato and Swiggy were described as crucial entities for the restaurant industry. The firm stated that Indian restaurants can attribute approximately 33% of their revenue to these food delivery aggregators.
Read More: Food delivery aggregators contribute one-third of eateries’ revenue: JM Financial report
“With no meaningful competition in sight, we believe both incumbent aggregators are becoming indispensable to the ecosystem,” the report said.
Zomato recently launched a new feature called the multi-restaurant cart, which allows users to add items from multiple restaurants simultaneously. Previously, users were limited to adding items from only one restaurant at a time. In the fourth quarter of the fiscal year 2022-2023, Zomato’s net loss decreased by 48% year-on-year (YoY) to INR 187.6 Crores.
Read More: Zomato aims to boost Food Orders; Allows users to order food from Multiple Restaurants at Same Time
Zomato also stated that its business achieved positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) when excluding its quick-commerce vertical, Blinkit.