ICICI Securities raises Zomato’s target price, anticipating strong growth
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.
