Zomato shares have delivered standout returns over the past year, surging nearly 80% in 2023. The online food delivery platform continues its strong growth momentum with order volumes and revenue increasing each quarter. Top brokerages have turned highly bullish on the stock, raising their target prices by 13% on an average.
Four Global Brokerages Increase Zomato Target Price by 13%
Riding high on upbeat Q3 performance and long-term growth forecasts, top global brokerage houses have raised their target price for Zomato shares in January 2024.
- Jefferies – Raised target from ₹165 to ₹190 per share
- Goldman Sachs – ₹130 to ₹160 target price
- Morgan Stanley – Increased target to ₹140-150
- HSBC – New target of ₹140-150 per Zomato share
The average target price estimated by these four brokerages has increased 13% from ₹143 in December 2023 to ₹162 in January 2024. This points to a potential 30% upside for Zomato shares over the next year.
Zomato Stock Jumps 18% in 1 Month, Hits New High
Encouraged by the phenomenal growth exhibited by Zomato over the past year, investors continued buying the stock aggressively in 2024.
The share price has delivered superb returns across different time frames:
- 1 month – 18% gains
- 3 months – 25% returns
- 6 months – 78% surge
- 1 year – 15% upside
On January 12, 2024, Zomato hit a new 52-week high of ₹141.5 taking YTD gains to over 20%. The stock is trading significantly above its IPO issue price of ₹76 per share.
Strong Q3 Performance, 30% Growth Estimates till 2030
Zomato reported stellar 40% jump in revenue to ₹1,661 crore in the September 2023 quarter. Adjusted EBITDA losses reduced sequentially even as order volumes continued to climb.
Topping 10 million orders per month, Zomato is expected to sustain over 30% yearly growth through 2030, as per brokerage estimates.
Revenue growth forecasts:
- 2022-24 to 2029-30 CAGR – 30%
- Online grocery – 29% CAGR
- Food delivery vertical – 20% growth
The December 2023 quarter is expected to show further improvement in order rates, MTU (monthly transacting users) and revenue per order on the back of seasonal demand.
Brokerages believe the rise in service fees from 15% to 18% effective December 2023 will boost Zomato’s earnings from FY25 onwards. Higher online ordering penetration also provides upside potential for the platform.
Domestic Investors Remain Bullish on Long-Term Prospects
On the domestic front, investor confidence in Zomato remains high among retail and institutional investors in 2024. FII ownership stands at 55% while DIIs own 13% stake as of December 2023.
Mutual funds have hiked their holdings from 8.3% to 10.6% over the last two quarters with number of schemes owning the stock rising from 22 to 28.
Leading mutual funds investing in Zomato include:
- Motilal Oswal MF – 1.88%
- Mirae Asset MF – 1.46%
- Axis MF – 1.33%
- Nippon India MF – 1.27%
Final Takeaway – Strong Buy for Long Term Gains
Given the huge market opportunity and strengthening moats around brand, technology and data science, Zomato seems poised for massive growth over the next decade.
As per average brokerage estimates, the stock offers nearly 30% upside towards ₹200 per share over the next year.
For investors who can withstand some volatility, Zomato remains a strong buy for 2024 and beyond focused on India’s booming online food delivery market.