Buy Zomato, target price Rs 330: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a buy call on Zomato with a target price of Rs 330. The current market price of Zomato Ltd. is Rs 260.15. Zomato., incorporated in 2010, is a smallcap company with a market cap of Rs 21,6839.74 crore, operating in Services sector.

Zomato's key products/revenue segments include service revenue, royalty income, traded goods for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a consolidated total income of Rs 5,020 crore, up 13.01% from last quarter's total income of Rs 4442 crore and up 64.05% from last year same quarter's total income of Rs 3,060 crore. The company has reported a net profit after tax of Rs 176 crore in the latest quarter.

The company's top management includes Mr.Kaushik Dutta, Mr.Deepinder Goyal, Mr.Sanjeev Bikhchandani, Ms.Aparna Popat Ved, Ms.Gunjan Tilak Raj Soni, Ms.Namita Gupta, Ms.Sutapa Banerjee. The company has Deloitte Haskins & Sells as its auditors. As on 30-09-2024, the company has a total of 883 crore shares outstanding.

Investment Rationale
Zomato's food delivery business is stable, and Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery and e-commerce. Motilal Oswal Financial Services' estimates are largely unchanged as the increase in Blinkit GOV as a result of dark store network expansion is offset by decreased profitability owing to increased capex and investments. The brokerage says Zomato should report PAT margin of 4.7%/8.6%/12.9% in FY25/FY26/FY27. Their DCF-based valuation of Rs 330 suggests a 28% upside from the current price. Motilal Oswal has reiterated a BUY rating on the stock.