Zomato rises 4%, hits 5-month high; stock surges 28% in one month.

Zomato, the Indian food delivery company, has seen its stock prices rise to a five-month high of Rs 66.05, gaining 4% in intra-day trade on the Bombay Stock Exchange on Thursday. This marks the highest level for the stock since December 5, 2022, and a 28% rally in the past month, compared to a 3% rise in the S&P BSE Sensex. The stock has recovered 63% from its 52-week low level of Rs 40.55 in July 2022, hitting a 52-week high of Rs 79.80 in June last year.
Last month, Motilal Oswal Financial Services (MOFSL) gave Zomato a ‘BUY’ rating and a Rs 70 target price, calling the food delivery business a nascent stage in India with a long runway for growth. It expects Zomato to report a substantial 29% CAGR over FY23-25, with the company turning profitable by Q2FY24 and breakeven during FY25. However, heightened competition and attrition at senior leadership are areas of concern, according to MOFSL. Meanwhile, JM Financial Institutional Securities believes Zomato is well positioned to benefit from improving tech penetration and the rising income share of digitally native millennials and GenZ. It expects the company to report a CAGR growth of 21% over FY23-27 due to its growing focus on high-quality development and the fact that incremental gains could be slower than in the past, as the penetration of the online channel in the organised food services market is already relatively high at ~33%. The June quarter is expected to recover sequentially due to IPL seasonality and the low base effect.