Zomato Q2 Results Review: Analysts Hike Target Price On Profit, Blinkit Surprise

Shares of Zomato Ltd. regained their Rs 1 lakh crore market cap after hitting a 52-week high on Monday as analysts hiked the target price, citing better revenue growth in Blinkit and an 18-fold jump in profit sequentially.

The Gurugram-based company's net profit jumped 1700% to Rs 36 crore in the quarter ended September, according to an exchange filing. Analysts polled by Bloomberg estimated net profit at Rs 13.8 crore.

• Revenue up 17.9% at Rs 2,848 crore. (Bloomberg estimate: Rs 2,559.3 crore).

• Ebitda loss at Rs 47 crore vs Rs 48 crore.

• Net profit up 1700% at Rs 36 crore. (Bloomberg estimate: Rs 13.8 crore).

Shares of the company rose as much as 4.7% to Rs 121.95 apiece, to hit a fresh 52-week high. This compares to a 0.6% advance in the benchmark Nifty 50 at 10:30 a.m.

The stock climb also meant that Zomato has now reclaimed Rs 1 lakh crore in market capitalisation, bouncing back to levels it last reached in January 2022.

Here's what analysts made of Zomato's Q2 outing:

• Maintains 'overweight' stance, raises target price to Rs 140 from Rs 125 earlier, implying a potential upside of 20%.

• Sees platform fee increasing to Rs 5 per order in near term and aid margins.

• Anticipates strong revenue growth in Blinkit and better monetisation.

• Positive cash generation and strong cash balance would open up possibility of capital return to shareholders.

• Raised consolidated Ebitda estimates for FY24-27 by 3-5%, and FY27E multiple raised to 32 times (vs ~30 times earlier).

• Maintains 'reduce' rating, raises target price to Rs 75 from Rs 60, implying a potential downside of 36%.

• Food delivery business growth driven by robust adoption of Gold program.

• Estimates 24.5% CAGR for food delivery business over FY24-25.

• Blinkit returns to strong growth trajectory.

• Competitive intensity slowed in quick commerce.

• Key risks: Stronger-than-expected gross order value growth of food delivery business; quicker breakeven in quick commerce.

• Rating upgraded from 'outperform' to 'buy', target price hiked from Rs 120 to Rs 168, with 44% upside.

• Substantial growth potential in monthly transacting customers.

• Forecasts food delivery monthly transacting users to rise to 2.6 crore in FY25.

• Large growth runway for quick commerce segment.

• Forecasts Blinkit to turn Ebitda positive in FY25.

• Maintains 'buy' rating, raises target price to Rs 165 from Rs 130, implying a potential upside of 53%.

• Blinkit achieved contribution breakeven, a key positive, on the back of increasing takerates and scale efficiencies.

• Despite the growth focus, margins continued to inch-up albeit at a gradual pace.

• Unit economics to steadily improve with scale, as Zomato unlocks cost efficiencies and as customer willingness to pay for convenience increases.