Zomato climbs after foreign broker maintains outperform rating

Zomato rose 2.85% to Rs 63.15 after a foreign broker reportedly maintained an outperform rating on the stock with a target price of Rs 90.

The brokerage reportedly said that Zomato can turn EBITDA breakeven as guided. Current estimates could drive a valuation shift to EV/EBITDA. Zomato already has a contribution positive model in the top 120 cities, it added. The broker sees a substantial scope for increased take rates in smaller cities.

Zomato connects customers, restaurant partners and delivery partners. Customers use Zomato to search and discover restaurants, read and write customer generated reviews and view and upload photos, order food delivery, book a table and make payments while dining-out at restaurants. On the other hand, it provides restaurant partners with industry-specific marketing tools which enable them to engage and acquire customers to grow their business while also providing a reliable and efficient last mile delivery service. The company also operates a one-stop procurement solution, Hyperpure, which supplies high quality ingredients and kitchen products to restaurant partners.

The online food delivery platform reported a consolidated net loss of Rs 186 crore in Q1 June 2022, as against net loss of Rs 360.70 crore in Q1 June 2021. Revenue from operations stood at Rs 1,413.9 crore in Q1 June 2022, up 67.44% from Rs 844.4 crore reported in Q1 June 2021.

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