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Zomato m-cap pips that of Tata Motors, Bajaj Auto; analysts stay bullish

Zomato share price: Thus far in the calendar year 2024, Zomato share price has more-than-doubled investors' wealth as they have zoomed 136 per cent

Photo: Shutterstock

Photo: Shutterstock

Nikita Vashisht New Delhi

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Zomato share price: Food delivery and quick-commerce service app, Zomato, now commands a market-capitalisation higher than automobile stalwarts Tata Motors and Bajaj Auto. 
At 1:05 PM, Zomato stood with a market-cap (m-cap) of Rs 2.79 trillion with the shares trading 0.9 per cent lower at Rs 289.25 per share. By comparison, Tata Motors’ m-cap stood at Rs 2.75 trillion, while that of Bajaj Auto was Rs 2.49 trillion on the BSE. 
Tata Motors shares were quoting 0.97 per cent lower at Rs 748.35 per share, while Bajaj Auto’s shares were down 0.46 per cent at Rs 8,913.95 per share. The BSE Sensex index, on the other hand, was down 884 points, or 1.1 per cent, at 79,298 level.
 
  Thus far in the calendar year 2024, Zomato share price has more-than-doubled investors’ wealth as they zoomed 136 per cent from a level of Rs 124 per share at the end of CY-2023. The shares touched their all-time high level of Rs 304.5 on December 5, 2024.
  Tata Motors shares, meanwhile, have slipped 0.3 per cent this year, though Bajaj Auto shares have risen roughly 32 per cent this year.
  In a report last month, analysts at Morgan Stanley said Zomato stock could be a “potential doubler in three to four years”. The brokerage raised the stock’s target price to Rs 355 but retained its ‘Overweight’ rating on the stock.
  “On a consolidated basis, our price target now implies EV/adj Ebitda multiple of ~62x on FY27e adjusted Ebitda, which would imply EV/adj Ebitda to adj Ebitda CAGR of 1.7x, which would be towards the higher end of the peer set in India's Internet space and India's consumption basket on the discretionary side,” the brokerage said.
  Individually, it values the food delivery business at 32x on FY27e adj EBITDA earnings (base case), 30x (bear case), and 35x (bull case), implying an EV/adjusted Ebitda to adjusted Ebitda CAGR ratio of 1.4x-1.5x.
  It values the Quick Commerce business on FY31e adj Ebitda multiple of 25x for the bear case, 36x for the base case and 41x for the bull case, implying EV/adjusted Ebitda to adjusted Ebitda CAGR ratio of 1.4x.
  According to Morgan Stanley analysts, Zomato is well positioned amongst the key players to leverage the booming quick commerce industry.
  It expects Zomato to sustain around 40 per cent market share in Quick Commerce industry, which, according to the brokerage, could be worth $6.8 billion by the end of 2024.
  Morgan Stanley further sees the industry growing to $42 billion by 2030 (base case) and $55 billion (bull case).
  That said, as near-term competition intensity could remain high, Morgan Stanley forecasts the company to stay at adjusted Ebitda breakeven for a little longer than just one to two quarters.
  “We are now revising our Quick Commerce GOV (Gross Order Value) and revenue estimates higher for F2026-27 by 25-34 per cent. We also build in higher investments in the next 12 months thereby pushing out our profitability assumptions by 12 months. This drives cuts to our F2026-27 adjusted Ebitda estimates, but with adjusted Ebitda margins of over 5 per cent by FY31” it said.
 

Zomato’s Bistro

Meanwhile, Zomato’s wholly owned subsidiary Blink Commerce recently launched a new app called ‘Bistro’ that offers delivery within 10 minutes of convenience food items across hot & cold beverages, shakes & juices, snacks & fast food, value meals and deserts, amongst others. This is similar to Zepto Café and Swiggy’s Bolt. 
According to an analysis by JM Financial Services, since Bistro will deliver food from self-operated kitchens, the platform would have significantly better control over quality of ingredients used in food preparation, hygiene conditions in the kitchen and end delivery timelines, which should help improve customer experience and their ordering frequencies. 
“While we await more details before baking in the impact of Bistro’s launch in our model, this could help Zomato better penetrate the small ticket food consumption space in India,” the brokerage said with a ‘Buy’ rating.

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First Published: Dec 19 2024 | 2:11 PM IST

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