According to Nomura India, Zomato will probably balance its growth and margin goals in the near future. The foreign brokerage believes that Zomato’s medium-term goal of a 4-5 percent adjusted Ebitda margin in the meal delivery industry is not at risk.
The massive online meal delivery company Zomato Ltd.’s June quarter results exceeded expectations in a number of areas. The Zomato management set a goal to raise Blinkit’s dark store count from 639 at the end of the June quarter to 2,000 by the end of CY26. They also guided for a growth rate of at least 20% in the short term in the Food Delivery (FD) business. Following Q1 earnings, market analysts are generally optimistic about the stock and see up to 50% possible upside on the counter.
According to Nomura India, Zomato will probably balance its growth and margin goals in the near future. Regarding Zomato’s medium-term goal of 4-5 percent adjusted Ebitda margin in the FD segment, the foreign brokerage sees no risk. Nomura India anticipates FD gross order value (GOV) to grow by 20–23% YoY in FY25–26, with a 7.5% contribution margin—an increase of 60 basis points over FY24.
We observe that Zomato still has a long way to go in both the FD and Q-commerce industries despite its rapid growth and increasing profitability. We increase our target price to Rs 280 in order to account for Blinkit’s anticipated longer-term growth. We increase Ebitda by 26–60% for FY25–26F. Slowing growth in FD and Q-commerce businesses, as well as the capital allocation of $1.5 billion in cash, are major risks, the report stated.
Blinkit is known for defying attempts to fairly value the stock because of its robust growth and the disruptive and dynamic nature of quick commerce, according to MOFSL. With a year-over-year increase of more than 100% in gross order value (GOV), the brokerage believes that Blinkit’s GOV is the primary driver of variation for a DCF-based price target.
According to reports, CLSA raised its target price to Rs 350 per share and kept a “Buy” rating on Zomato, among other brokerages. While Goldman Sachs and Citi see the stock at Rs 280 a share, UBS suggested a target price of Rs 260 per share. The target price per share for Axis Securities is Rs 287, Morgan Stanley is at Rs 278; Bernstein is at Rs 275; and Jefferies is at Rs 275.
Zomato should report a profit margin of 4% in FY25 and 8.7% in FY26, according to MOFSL. Zomato’s food delivery business is steady, and Blinkit presents a chance for a generation to take part in the upheaval of sectors like e-commerce, grocery, and retail, the statement said.
Our Rs 300 DCF-based valuation indicates a 25% increase from the current price. We continue to recommend buying the stock, according to MOFSL.
According to Nuvama, Zomato is still living up to its promise of rapid expansion and increased profitability. It pointed out that the management is not lowering its growth aspirations, mentioning a target of adding 2,000 dark stores by 2026. Food delivery is now valued at $14 billion by this brokerage, while Blinkit is valued at $13 billion.
“Maintain ‘BUY’ with a revised target of Rs 285 (earlier Rs 245) based on a valuation rollover to Sep-26E,” it stated.
While ESOPs may gradually increase in the near future, according to JM Financial, management has warned that employee costs, including ESOPs, may drop to 6–8% of adjusted revenue in FY26 as opposed to 12% in FY24.
“We increase earnings by 2–15% over FY25–27 and increase our target price for September 25 to Rs 260 from Rs 230 previously. Keep it at ‘BUY,'” the brokerage stated.
