Zomato share price extends gains for sixth straight session to a record high; JM Financial raises target price

Zomato share price rose over a percent in early trade on Friday, extending gains for the sixth straight session. Zomato shares gained as much as 1.49% to a fresh record high of ₹199.75 apiece on the BSE.

Today’s gains in Zomato share price came after JM Financial raised the target price on the stock and sees an upside potential of over 32%.

JM Financial has a ‘Buy’ rating on the stock and raised Zomato share price target to ₹260 per share from ₹200 earlier, citing a meteoric rise of Blinkit, its quick commerce business which continues to grow exponentially. Its three-year target price for Zomato stands at ₹400 per share.

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Zomato continues to be one of JM Financial’s preferred picks in the listed Internet space as it believes the company is well-positioned to benefit from robust industry tailwinds for the hyperlocal delivery businesses. Its balance sheet also remains strong with net cash of ₹12,000 crore as of December 2023.

“We value food delivery at ~50x Mar'26 pre-IND AS EV/EBITDA, a significant premium to leading listed QSRs as it is a diversified play on the organized food services industry, dependent neither on growth of a few players nor on changing consumer appetite for any cuisine and operates on a lean business model, with limited need for capex or working capital investments," JM Financial said in a report.

The brokerage firm believes Blinkit in the near term will increase its investments in the expansion of the dark-store network, retail category addition as well as product depth penetration.

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It expects Blinkit to double down on growth post break-even at Adjusted EBITDA levels by Q1FY25, which should ensure exponential growth for the business in the near to medium term.

“We also believe Blinkit in the long term will command premium profit multiples to Zomato’s own food delivery business as it is relatively more sticky and a play on retail commerce (bigger TAM and longer growth runway). However, given that Blinkit’s near-term profitability will be lower than food delivery, we value the business at 2.5x Mar'26 GOV, which translates to a FV of $11 billion ( ₹91,900 crore) by March 2025," JM Financial said.

Accordingly, it raised Blinkit’s FY25 and FY26 GOV (Gross Order Value) estimates by 15% and 41%, as it expects a robust improvement in order volumes due to these investments.

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“Volume growth, in turn, will be driven by a sharp increase in MTUs and ordering frequencies. Growth will also be a function of improvement in capacity utilisation rates of existing stores and addition of new stores in existing as well as newer geographies," the broking house noted.

Zomato share price has rallied more than 27% in one month, while the stock has given returns of over 61% this year so far. In the past one year, Zomato shares have spiked over 274%.

At 11:05 am, Zomato share price was trading 1.24% higher at ₹199.25 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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