Zomato shares climb 3% today post Q2 earnings; here's what brokerages say

Shares of online food and grocery delivery platform Zomato Ltd were trading higher in Wednesday's trade. Last checked, the stock was up 2.50 per cent at Rs 262.60. At this price, it has delivered multibagger returns to investors by rallying 110.92 per cent on a year-to-date (YTD) basis.

The company reported a stellar growth of 388.89 per cent, year-on-year (YoY), in its second quarter consolidated net profit (Q2 FY25). In addition, it has also approved raising up to Rs 8,500 crore through the issue of shares in a qualified institutional placement (QIP).

Separately, Zomato has raised its platform fee from Rs 7 to Rs 10 just in time for the festive season.

Brokerages have maintained their 'Buy' call for Zomato. CLSA has reiterated its 'Outperform' rating with a revised target of Rs 370 from Rs 353 earlier. Nomura has also revised its target from Rs 280 to Rs 320 while maintaining a 'Buy' call.

Nuvama Institutional Equities has also retained its 'Buy' call on the counter with a target price of Rs 325 due to strong quarterly earnings. "Zomato reported a strong Q2 FY25 performance with revenue at Rs 4,800 crore (+14.1 per cent QoQ/+68.5 per cent YoY) against a consensus estimate of Rs 4,680 crore. EBITDA margin came in at 4.7 per cent (+50bp QoQ) against a consensus estimate of 4.5 per cent. PAT stood at Rs 176 crore, below estimates of Rs 254.4 crore due to tax paid pertaining to treasury income," the domestic brokerage said.

"Zomato continues to push the paddle of growth across its business. We expect Blinkit dark store addition to be faster than initially expected—hence growth shall be even faster while profitability would be delayed due to higher upfront cost thereof, which, in our view, is the right strategy in a cut-throat QC market. Retain 'BUY' with a SotP-based TP of Rs 325 (earlier Rs 285) on a rollover to Dec-26E," it added.

Nuvama mentioned that food delivery's contribution margin rose to 7.6 per cent from 7.3 per cent in Q1 FY25 while adj. EBITDA margin as a percentage of GOV improved 10bp QoQ to 3.5 per cent.

"Zomato continues to deliver strong growth along with improvement in profitability. We now value food delivery at $15 billion and Blinkit at $14 billion and are rolling over the valuation to Dec-26E," it further stated.