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ICICI Securities raises Zomato's target price, anticipating strong growth

EditorPollock Mondal
Published 10/11/2023, 05:16 PM
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ICICI Securities has revised its target price for Zomato to Rs 160 from Rs 120, suggesting a potential stock increase of 51%. This adjustment comes on the heels of a significant surge in Zomato's shares, which have climbed 139% since February and recently rose an additional 2.78%, hitting a new year-high.

The brokerage firm views Zomato's valuations as sensible and sees potential for a significant rerating. It predicts that Zomato will achieve its medium-term guidance of an adjusted Ebitda of 4-5% of GOV by the December quarter and quick commerce profitability by the June quarter of 2024.

ICICI Securities also expects Ebitda losses from Hyperpure, Zomato's business-to-business food ingredient arm, to decrease from 5.7% in Q1FY24 to 3.2% in Q1FY25. The firm projects robust revenue growth for the food delivery business at rates of 25%, 26%, and 20% for FY24, FY25, and FY26 respectively.

For Zomato as a whole, ICICI Securities forecasts revenue growth of 43%, 34%, and 25% for the same periods. The firm also predicts an Ebitda margin of 14%, 21%, and 23% for the food delivery business for FY24 through FY26, with the overall Ebitda margin projected at 5%, 12%, and 15%.

Maintaining its buy rating on Zomato, ICICI Securities states that the company remains their top pick in the Indian internet space.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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