Zomato Shares Surge as Investors Grow Confident in the Company’s Growth and Margin Prospects
Zomato shares saw a 1.7% increase in trading on the NSE on September 18, fueled by investors’ growing confidence in the company’s ability to deliver visible revenue growth and margin expansion.
According to a Jefferies report, most investors complimented CFO Akshant Goyal during the company’s US roadshow for delivering on promises made a year ago. The report said that skepticism was high back then, but the exact opposite is true now.
Jefferies expects Zomato’s food delivery value to grow at 20-25%, and its new quick commerce business to grow at a whopping 60% CAGR. The report said that food delivery has a large growth runway as restaurants contribute only 10% of food consumption in India. Zomato and Swiggy are enabling growth by sharing local insights with restaurants which improve cuisine diversity and drive local demand.
On the other hand, Zomato’s quick commerce could become even bigger than food delivery in India’s sizable retail opportunity.
In addition, Jefferies expects food margins to expand to 5% gradually, while quick commerce will likely break-even in four quarters.
Jefferies, which has a ‘buy’ rating on the food delivery platform with a target price of Rs 130, says that with only ~20mn monthly transacting users currently, Zomato has a long runway for customer acquisition and revenue growth. But adds that this may come at the cost of near-term profitability. Post its IPO, the report adds, the company has shifted its focus from survival to being future-ready.
Related News
- 22 Sep
NBCC shares trade higher on Rs 100 crore work order from SAIL
NBCC shares were trading 3 percent higher on September 22 after the company announced having bagged a work order worth Rs 100 crore from SAIL. This is the fourth order-win announced by the company in this month, the total value of the same being Rs 450 crore. NBCC is a public sector undertaking engaged in the business of construction and real estate development. The company specializes in providing project management, consultancy and engineering services for civil construction, infrastructure development, and real estate projects.
- 22 Sep
Glenmark Pharma stock falls on stake sale in Glenmark Life Sciences
Glenmark Pharma stock fell after the company announced it would sell a 75% stake in its subsidiary Glenmark Life Sciences to Nirma. Analysts expect the stake sale to benefit Glenmark Pharma, as it will transition from a net debt position to a cash surplus position. This is expected to have a positive impact on the company's return ratios over the next two to three years.
- 22 Sep
Berger Paints Shares Hit 52-Week High After Turning Ex-Bonus
Berger Paints shares surged 6% to hit a 52-week high after turning ex-bonus on the record date for the issue of bonus shares in the ratio 1:5. The company posted a net profit of Rs 326.3 crore in the April-June quarter of FY24, up 39% year-on-year, on revenue of Rs 2,739.7 crore, up 10% year-on-year. The company expects to get net cash positive by the end of this fiscal year and expects to end the year with double-digit revenue growth on strong demand outlook.
- 22 Sep
Market Update for September 22, 2023
IdeaForge Tech up 3.4% on order RVNL up 3% on highway MoU JSW Steel up 0.4% on sale ICICI Lombard down 1.6% on CEO exit ICICI Bank down 1% on healthcare investment NHPC up 1.3% on extended additional charge Kalyani Forge up 3.2% on new MD IRB Infra up 2.5% on road project closure
- 22 Sep
Lux Industries Shares Down 3% After Income Tax Raid
Lux Industries shares fell 3% on September 22 after news emerged that the Income Tax department had conducted searches at the company's premises in Kolkata and alleged a tax evasion of Rs 200 crore. The company has confirmed the searches and is extending full support.
Leave a Reply