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Synopsis: Zomato's stock surged by 5.8% to a record high of ?280 on the BSE, driven by positive outlooks from brokerages like UBS and Morgan Stanley. The strong performance of Zomato's quick commerce division, Blinkit, and raised GMV estimates for FY26-28 contributed to this rally. With a promising long-term outlook and strategic growth in key areas, Zomato continues to attract investor confidence.
Positive Broker Ratings Fuel Optimism
Global brokerage UBS has maintained its bullish stance on Zomato, increasing its target price to ?320 from the previous ?260. This upgrade comes in the wake of Zomato’s strong first-quarter results, which exceeded expectations across its core food delivery and burgeoning quick commerce segments. UBS raised its gross merchandise value (GMV) estimates for Zomato's food delivery by 2-3% and for quick commerce by 20-30% for FY26-28, reflecting the company's strong growth trajectory.
Morgan Stanley also contributed to the stock's upward momentum by reaffirming its 'Overweight' rating with a target price of ?278. The firm highlighted Zomato’s robust execution and market leadership in the food delivery space, alongside its promising expansion in quick commerce through Blinkit, Zomato's fast-growing grocery delivery service. This growth is expected to sustain the company’s premium valuation despite near-term investments potentially impacting profitability? (mint)? (Business Today).
Blinkit’s Record Performance Adds to Momentum
Blinkit, Zomato’s quick commerce division, played a crucial role in the stock’s recent surge. Albinder Dhindsa, CEO of Blinkit, revealed that the platform hit record-breaking numbers in terms of orders per minute (OPM) and overall sales, particularly during the Raksha Bandhan festival. This exceptional performance underpins the bullish sentiment surrounding Zomato, as investors see significant potential in the quick commerce market? (mint).
Strong Long-Term Outlook
Zomato’s long-term prospects appear bright, with UBS noting that the company is trading at 35 times FY27 EV/EBITDA, compared to the average of 30 times for its Indian consumer/retail peers. This premium is justified by Zomato’s superior growth and margin expansion profile. Additionally, Motilal Oswal Financial Services (MOFSL) reiterated its 'Buy' rating, emphasizing Blinkit’s potential to disrupt industries like retail, grocery, and e-commerce, thus providing a "generational opportunity" for investors? (mint).
Conclusion
Zomato's recent stock performance reflects strong market confidence backed by robust financial results and strategic growth in key areas. As brokerages continue to raise their target prices and with the company demonstrating strong execution in both food delivery and quick commerce, Zomato appears well-positioned for sustained growth.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial advice. Investors are advised to consult with certified financial advisors before making any investment decisions.
