Zomato Stock Hits New High as Investors Await Q1 Results; UBS Predicts 16% Gain

Zomato shares climbed nearly 3% to a new record high of ₹223.25 on July 12 as investors look forward to the company’s Q1FY25 earnings report.

Expectations and Analyst Predictions

Zomato recently became profitable, and analysts are eager to see how its quick commerce business performs. Elara Capital predicts Zomato will report a revenue of ₹39,600 crore in Q1FY25, up 63.9% year-over-year, driven by strong food delivery and quick commerce business.

Market Conditions

Elara Capital noted that May 2024 was slightly slow due to heat waves, limited delivery partners in tier I markets, and the general elections. However, order volumes picked up in June and are expected to maintain momentum.

UBS Rating

UBS maintained its ‘buy’ rating for Zomato, raising the target price to ₹260 from ₹250. The brokerage noted that industry volume growth was 1% month-on-month in June, and estimated Zomato’s GMV quarter-on-quarter growth for Q1FY25 at 9%.

Financial Performance

Zomato reported strong FY24 results with adjusted revenue of ₹13,545 crore, a 56% year-over-year increase, and expects 40% growth in the coming years. The company achieved positive EBITDA and PAT for the first time and aims for a 4-5% EBITDA margin while continuing to invest in growth.

Future Plans

Zomato plans to aggressively expand its quick commerce arm Blinkit, aiming to double its store count and increase its Gross Order Value (GOV) by four times. The company’s B2B business, Hyperpure, also expects strong growth, with a focus on improving margins.

ESOP Plan and Valuation

Zomato’s shareholders recently approved an employee stock option plan (ESOP 2024) for 183 million stock options. JM Financial maintained a ‘buy’ rating on the stock but adjusted its target price to ₹230 from ₹250, accounting for ESOP costs as a regular business expense.

Stock Performance

Zomato shares ended 2.8% higher at ₹223.21 on the NSE, just below its lifetime high. The stock has surged around 79% this year, outperforming the benchmark Nifty’s 12.7% return. Over the past year, Zomato’s stock has soared over 188%, nearly tripling investors’ money compared to Nifty’s 26% rise.