Zomato stock hits new high after CLSA hikes target price to Rs 227


Shares of online food delivery platform Zomato soared to a new 52-week high of Rs 159.20 on the NSE on Friday, after global brokerage firm CLSA raised its target price on the stock by 61% to Rs 227. The stock closed 3.7% higher at Rs 155.05, outpacing the Nifty index, which gained 0.8%.

CLSA maintained its ‘buy’ rating on Zomato, citing its strong growth prospects and improving profitability. The brokerage said that Zomato’s Q3 results showed a path to consistent profits, as the company reported a net profit of Rs 207 crore, compared to a net loss of Rs 18,564 crore a year ago. The company’s revenue also grew 37% year-on-year to Rs 1,301 crore, driven by higher order volumes and average order value.

CLSA said that Zomato has a significant upside potential, even in scenarios where its base case assumptions for food delivery may not fully materialise. The brokerage expects Zomato to grow its revenue at a compound annual growth rate (CAGR) of 42% over FY21-24, and achieve a return on equity (ROE) of 15% by FY24. CLSA also said that Zomato’s valuation is attractive, as it trades at a 50% discount to its global peers on a price-to-sales basis.


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Zomato’s stock has rallied over 200% in the past year, reflecting its dominant position in the online food delivery market, which is expected to grow to $12.5 billion by 2026, according to a report by PwC. Zomato competes with Swiggy, which is also planning to go public in 2024.


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Zomato has also diversified its business by launching several digital initiatives, such as a video KYC facility, a chatbot, and a co-branded credit card.

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