Zomato rallies 5% to hit record high; stock has zoomed 127% so far this yr: Zomato share price
Source: Business Standard
The company’s stock has surpassed its previous high of Rs 280 that it touched on August 19. Thus far in the calendar year, the market price of Zomato has more than doubled or zoomed 127 per cent, as compared to the 13.4 per cent rise in the BSE Sensex.
Meanwhile, traction in other businesses–Hyperpure and Going Out–was healthy (respective revenues grew 96.4 per cent and 105.8 per cent Y-o-Y).
In terms of profitability, in the near term, the management expects the going-out business to continue to remain near break-even on adjusted earnings before interest, tax, depreciation and amortisation (Ebitda)-basis, as has been the case for the company so far.
The management too indicated that quick commerce is more of an experience-led business, rather than pure discounting, noted analysts at Elara Capital. Thus, they continue to believe that the threat of new entrants via discounting may not hurt Blinkit’s growth prospects and its scale beyond non-metros is a key monitorable, according to them.
The brokerage added that the management’s intent to capture market share ahead of peers led by robust expansion plans also augurs well for medium-term growth of the company.
“Expect Blinkit to be a bigger driver for an earnings upgrade in the medium term, once certain scale with better profitability is achieved,” the brokerage stated.
Last week, JP Morgan also maintained an ‘Overweight’ rating on Zomato, with a target price of Rs 340 per share.
Zomato is spearheading a rapid retail consumer transformation via its convenience and selection-focused quick commerce business, with ambitious rollout plans across all metros having proven the model in NCR, from where it gets around 50 per cent of its GOV and store count. Scale should help the company drive monetisation from channel margins and ad spending.
With the bulk of stores now crossing positive DS level thresholds, incremental store economics are likely to turn more positive on Ebitda, giving Blinkit the licence to scale faster than peers and current targets, the brokerage firm said.
“Finally, we also build a bigger ‘Going out’ business combining core dining with new ticketing business adding to the monetisability of its MTU universe,” they added.
First Published: Sep 11 2024 | 11:03 AM IST
