Zomato share price falls 6% after Q4 results. Opportunity to buy the stock?

Zomato share price fell 6% in early trade on Tuesday after the company announced its Q4 results. Zomato shares declined as much as 5.98% to ₹182.10 apiece on the BSE.

The food delivery platform Zomato reported a consolidated net profit of ₹175 crore in the fourth quarter of FY24 as against a loss of ₹188 crore in the same period a year ago. The net profit grew 27% from ₹138 crore posted in the December quarter.

Zomato’s revenue from operations in Q4FY24 increased 73% to ₹3,562 crore from ₹2,056 crore, YoY. Gross order value (GOV) for the March quarter grew across B2C businesses rising to 51% YoY to ₹13,536 crore.

At the operating level, the company posted an EBITDA of ₹86 crore, an improvement from the loss of ₹226 crore incurred during the same period last year.

Read here: Zomato Q4 results: Net profit at ₹175 crore versus loss of ₹188 crore YoY; 5 key highlights

Zomato’s quick commerce arm Blinkit achieved operational EBITDA break-even in March 2024.

Analysts maintained their bullish view on Zomato shares with some raising target price on the stock led by continued outperformance of Blinkit.

Here’s what analysts said on Zomato Q4 results and Zomato share price:

Emkay Global Financial Services

Zomato posted steady operational results, with revenue ahead of Emkay Global’s estimates whereas the margin miss was on account of higher than expected ESOP costs.

The brokerage firm has mostly retained FY26E earnings per share (EPS) estimates, but lowered FY25E EPS by ~20%, factoring in the slower profitability for Blinkit on the aggressive store addition plan and higher ESOP costs.

It maintained a ‘Buy’ rating with Zomato share price target of ₹230 per share on SOTP basis, valuing food delivery at ₹121 per share (DCF basis), Blinkit at ₹93 per share (DCF basis), and cash & other investments at Rs17 per share (BV).

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Nuvama Institutional Equities

Blinkit plans to raise dark store count from 525 in Q4FY24 to 1000 by end of FY25. While this shall impact short-term profitability, this shall cement Blinkit as the clear leader in quick commerce, Nuvama Institutional Equities said.

It values Zomato using SOTP, valuing food delivery at $10 billion and Blinkit at $13 billion. The upgrade was due to the increase in value of Blinkit due to faster-than-expected growth and clear leadership in quick commerce.

Nuvama maintained a ‘Buy’ rating on Zomato shares and raised the target price to ₹245 per share from ₹180 earlier.

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Elara Capital

Elara Capital said it continues to favor Zomato on its strong moat in the food business, which may continue to post an adjusted EBITDA CAGR of 47% in FY24-26E, and superior execution for Blinkit (market leadership), helped by better customer experience versus peers (on-time delivery, better product assortments).

It raised consolidated revenue estimates by 22% and 33% for FY25E and FY26E, led by better growth for Blinkit/Hyperpure. But its FY25E and FY26E consolidated earnings upgrade is mere 7% and 3%, on higher ESOP charges and lower EBITDA for Blinkit (latter’s focus is expansion).

The brokerage maintained ‘Buy’ rating and raised Zomato share price target to ₹280 apiece from ₹250 earlier.

At 9:20 am, Zomato shares were trading 4.96% lower at ₹184.10 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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