Zomato Share Price Hits Record High, Surges 10% After Strong Q1 Results

Shares of Zomato surged by approximately 10%, reaching a new record high of ₹261 on August 2, following the announcement of the company's outstanding quarterly earnings for June 2024, with all segments showing robust growth.

At 10:31 am IST, Zomato share price were trading at ₹256, up over 9% on the National Stock Exchange (NSE). The stock has increased by 105% this year, more than doubling investors' returns, while the benchmark Nifty 50 rose by 14% during the same period.

For Q1FY25, Zomato reported a significant rise in net profit to ₹253 crore, marking a 12,550% year-on-year (YoY) increase. The company's operational revenue also grew by 75% YoY, reaching ₹4,206 crore.

Brokerages remain optimistic about Zomato, raising their target prices for the stock. Analysts at Motilal Oswal highlighted that Zomato's food delivery business is stable, and Blinkit presents a unique opportunity to disrupt industries like retail, grocery, and e-commerce. The brokerage reiterated its buy rating with a DCF-based target price of ₹300, valuing the business using a 12.5% cost of capital.

In the reviewed quarter, Zomato's EBITDA stood at ₹177 crore, a turnaround from an EBITDA loss of ₹48 crore in the same quarter of the previous fiscal year. The Q1FY25 margins were at 4.21%. The gross order value (GOV) of the B2C business rose by 53% YoY to ₹15,455 crore.

Axis Securities initiated coverage on Zomato with a 'buy' rating and a target price of ₹280, indicating a 19% upside from the previous closing price of ₹234 per share. The brokerage anticipates Zomato will strengthen its position in the food-delivery market and increase its market share through technological advancements and innovations in the food-delivery sector. "This will continue to attract more users to the platform," they stated.

Zomato's food delivery gross order value (GOV) growth was strong at 27% YoY, while Blinkit showed impressive growth with GOV increasing by 130% YoY to ₹4,920 crore. The management projects that Food Delivery GOV will sustain a growth rate of over 20% in the near term, slightly lower than in recent quarters.

According to Emkay Global, Blinkit's remarkable growth is accompanied by ongoing improvements in profitability, maintaining adjusted EBITDA breakeven despite new store investments. The management aims to expand Blinkit's store count to 2,000 by 2026 to capitalize on market opportunities.

Additionally, Zomato announced plans to develop a comprehensive app called District, envisioned as its third-largest B2C business.

Emkay analysts adjusted their FY25-27 EPS estimates by -2% to 4%, considering Q1 performance and Blinkit's aggressive store expansion. The brokerage maintained a 'buy' rating and raised the target price to ₹270 per share.