Analysts have provided varying stock price targets for Zomato based on their assessments of the company’s performance. Nomura India believes the stock is valued at Rs 45 due to the challenges in achieving high gross order value (GOV) growth and significant improvement in contribution margins for the core food delivery business. Nuvama Institutional Equities, on the other hand, expects Zomato’s relaunch of its Gold membership plan to drive growth and suggests a target of Rs 94. Motilal Oswal Securities sees the stock reaching Rs 80, acknowledging Zomato’s underwhelming food delivery performance but highlighting the strong turnaround in profitability. Emkay values the stock at Rs 90.
Zomato reported a narrowing of losses in the March quarter and stated that its business, excluding quick commerce, achieved positive adjusted EBITDA during that period. The company aims to achieve positive adjusted EBITDA and PAT (profit after tax), including quick commerce, within the next four quarters.
As of Monday, the stock was trading at Rs 65.25 on the BSE, showing a 1.1% increase.
Analysts have differing views on Zomato’s future prospects. Nomura India believes that contribution margins are unlikely to decline unless the company becomes aggressive in discounting. Motilal Oswal Securities expects Zomato to reach break-even on adjusted EBITDA level in the third quarter of FY24 and on reported PAT by the fourth quarter of FY24. They project improving profitability and a positive EBITDA margin in FY26.
Overall, the assessments reflect a mix of views regarding Zomato’s growth potential, profitability, and ability to achieve sustained double-digit contribution margins in the long term.
