UBS Boosts Zomato’s Target Price: What You Need to Know About Its Q2 Performance
In a recent report, UBS has revised its target price for Zomato, projecting it to rise to ₹20. This adjustment comes in the wake of impressive Q2 results from Zomato. In this article, we delve into the details of Zomato’s quarterly performance and what this means for investors.
Quarterly Performance Highlights
Zomato's results for the June quarter have been nothing short of remarkable. The company's profit surged by 12.5% to ₹2,253 crore, a significant achievement that has caught the attention of analysts. Revenue also saw a notable increase, reaching ₹4,206 crore, up by 74% from the previous year. This growth is attributed to an increase in platform fees and enhanced operational profitability from Blinkit, Zomato’s quick commerce segment.
UBS’s New Target Price
UBS Securities has expressed a strong positive outlook on Zomato, elevating its target price from ₹4 to ₹20. This new target implies a potential upside of approximately 22% from the current stock levels. Following this report, Zomato’s shares saw a spike, reaching up to ₹4 during intra-day trading on August 19. However, the stock later experienced some profit-taking, closing in the red.
Stock Performance and Growth
Zomato has been a standout performer this year, delivering a remarkable 111% return to its investors. Over the past year, the stock has nearly tripled in value. The rapid growth can be attributed to the success of Blinkit, Zomato's quick commerce business, which saw record-breaking sales during Raksha Bandhan. Blinkit’s CEO, Avindra Dhinsha, reported peak times where 693 rakhi orders were placed per minute.
Analyst Views and Future Expectations
UBS commended Zomato’s growth in both its quick commerce and food delivery segments, which exceeded expectations. They project a 20-30% increase in Gross Merchandise Value (GMV) from FY 2026 to 2028, and a 2-3% growth in food delivery. Zomato’s rising popularity and increased market share in South India are also contributing to its growth trajectory.
Conversely, Morgan Stanley has rated Zomato’s stock as overweight with a target price of ₹78. However, they expressed concerns about the intensifying competition in the quick commerce sector, suggesting that it may take some time for Zomato to achieve profitability in this segment.
Conclusion
This analysis highlights the optimistic outlook from UBS and the impressive growth Zomato has achieved. For more updates on business and stock market trends, visit our website. Always consult a certified expert before making any investment decisions.
