Shares of Zomato are in focus today after brokerage firm Motilal Oswal initiated coverage on the stock with a target of Rs 70 which amounts to an upside of 30% against the previous close of Rs 53.91 on BSE.
In early trade, Zomato stock fell to touch an intraday low of Rs 53.30, falling nearly 1% on NSE. Zomato shares have fallen over 2% in the last five sessions.
In a year, Zomato share price has tumbled 35%. So far this year, the stock has tanked 11%. It hit a 52-week high of Rs 84.40 on April 18, 2022, and a 52-week low of Rs 40.55 on July 27, 2022.
In terms of technicals, the relative strength index (RSI) of Zomato stock stands at 56, signaling it is trading neither in the overbought zone nor in the oversold zone.
Zomato stock has a one-year beta of 1.5, indicating high volatility during the period. Zomato stock is higher than 5-day, 20-day and 50-day moving averages but lower than 100-day and 200-day moving averages.
According to analysts at Motilal Oswal Financial Services, The food delivery industry in India is all set to grow rapidly in the medium term driven by intensifying internet penetration, rising consumption, and growth in urbanization. "Zomato is a dominant player in the industry and we forecast the company to report 29% revenue CAGR over FY23-25," it said.
Zomato acquired the quick-commerce start-up Blinkit in August 2022. Hyperpure supplies everything from meat and seafood to fruits and vegetables to restaurants. With Zomato’s food business recording EBITDA breakeven in 1QFY23, Motilal Oswal analysts expect the company to turn profitable over FY25.
Brokerage firm Motilal Oswal expects strong growth to be complemented by Zomato turning profitable over FY25, despite elevated competitive intensity. "We initiate our coverage on the stock with a BUY rating and a target price of Rs 70," it said.
Another brokerage, ICICI Securities, has also assigned a 'buy' rating on Zomato shares with a target price of Rs 65. "Based on sustained improvement in the underlying operating metrics, we maintain BUY on Zomato with a DCF-based target price of Rs 65," it said.
Zomato's consolidated net loss for the third quarter of FY23 widened to Rs 347 crore from Rs 63 crore in the same quarter of the previous year. Adjusted EBITDA loss increased 38% sequentially to Rs 265 crore, but narrowed by 3% from the year-ago quarter
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