Zomato soars 4% on heavy volumes, market-cap nears Rs 1 trillion mark

Analysts at Kotak Securities believe Zomato's YoY GMV growth bottomed out in Q1FY24 at 14 per cent YoY and should witness improving performance Q2FY24 onward.

Shares of Zomato hit fresh 21-month high of Rs 113.25, up 4 per cent on the BSE in Thursday’s intra-day trade on the back of heavy volumes amid expectations of improvement in gross merchandise value (GMV) performance.

The stock of the online food ordering and delivery platform company was quoting at its highest level since January 2022. The counter saw huge trading activity with a combined 66.27 million equity shares representing 0.77 per cent of the total equity of Zomato changing hands on the NSE and BSE till 11:10 AM.

In past six months, the stock price of Zomato has more-than-doubled or zoomed 112 per cent, as compared to 10 per cent rise in the S&P BSE Sensex. A sharp rally in its stock price has seen the market capitalisation (market cap) of Zomato inch towards Rs 1 lakh crore (trillion) mark. Currently, Zomato’s market cap stood at Rs 97,144 crore, the BSE data shows.

The stock price of Zomato had hit an all-time high of Rs 169 on November 16, 2021. While, its market cap touched a record high of Rs 1.26 trillion on November 25, 2021, the CapitalinePlus data shows.

Analysts at Kotak Securities believe Zomato’s year on year (YoY) GMV growth bottomed out in June quarter (Q1FY24) at 14 per cent YoY and should witness improving performance September quarter (Q2FY24) onwards.

Take rates may not see significant upward movement from hereon, though these should remain steady. The brokerage firm upgraded its FY2024/25/26 GMV growth estimates to 18 per cent, factoring in better demand for food delivery. Higher revenue forecasts drive a 10-22 per cent adjusted EBITDA and 10-30 per cent net profit upgrade for FY2024-26.  Analysts said it remains positive on the stock, with a revised FV of Rs 125 (Rs 110 earlier).

Zomato’s profitability metrics should witness continuous improvement over the next 2-3 quarters, led by operating leverage-driven margin improvement in the food delivery business and curtailment of losses in the Hyperpure and Blinkit businesses. Compared with the Rs 52 crore adjusted EBITDA posted in Q1FY24, the FY2024 exit EBITDA run-rate could be sharply higher, the brokerage firm said.