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    Zomato shares rally 8% amid large volumes

    Synopsis

    Zomato has been swamped with multiple concerns over its Blinkit business after the quick-commerce platform’s delivery executives went on a strike protesting the change in the company’s payout structure.

    Zomato shares rally 8% amid large volumesAgencies
    Shares of Zomato rallied around 8% in intraday trade on Tuesday amid large volumes. The stock has gained as much as 18% in the last one month despite concerns about its Blinkit business.

    The stock was last trading 5% higher at Rs 58.75 apiece on NSE. On a year-to-date basis, it is down 2.5%. The shares have rebounded nearly 45% from their 52-week low.

    The rally in stock also comes amid reports that Citi has given a "buy" rating on the stock with a price of Rs 76 per share.

    Zomato has been swamped with multiple concerns over its Blinkit business after the quick-commerce platform’s delivery executives went on a strike protesting the change in the company’s payout structure.

    Unfazed, UBS has maintained its buy rating on Zomato with a target price of Rs 80. However, the global investment bank slashed FY24-25 food delivery GOV for Zomato by 10%.

    "Swiggy gained a share in the past six months due to more pronounced increases in Zomato's delivery fees. However, relaunch of subscription and adjustment in delivery fee/discounts is helping Zomato reverse share loss," the brokerage said.

    Motilal Oswal has initiated coverage on the food delivery giant with a buy target price of Rs 70, implying about 19% upside from the current levels.

    "With the food delivery market now a settled duopoly with high entry barrier, Zomato should benefit from industry growth and deliver 29% revenue CAGR over FY23-25 on higher penetration, higher proportion of transacting users, and increased ordering frequency," Motilal Oswal said.

    For the fourth quarter, brokerages expect Zomato's food delivery gross order value (GOV) to remain flat sequentially despite the activation of Zomato Gold membership, given a seasonally weaker quarter and online consumption fatigue trends. ICICI Securities expects the GOV to rise 14% year-on-year.

    Kotak Institutional Equities is building in a tepid 2.2% sequential revenue growth on account of lower food delivery orders. This will likely get offset by higher contribution from the Blinkit business.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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