Zomato shares surged 4 per cent on Thursday, reaching a new all-time high of Rs 283.60, following global brokerage firm UBS maintaining a buy rating on the stock with a target price of Rs 320, citing optimism about the company’s growth prospects.
UBS highlighted that industry volumes grew by about 2.5 per cent month-on-month in August 2024, after adjusting for the number of days. The competitive dynamic between Zomato and Swiggy persisted into Q2FY25, with UBS estimating Zomato’s gross merchandise value (GMV) growth at approximately 7 per cent quarter-on-quarter for the same period.
Zomato shares have been on a significant upward trend since global firm JP Morgan raised its target price for the stock to Rs 340 from Rs 208. JP Morgan increased its forecasts for FY25-27 by 15-41 per cent, noting that Zomato has driven rapid retail consumer transformation through convenience and selection-focused quick commerce.
The brokerage also noted the firm’s deeper penetration across all major cities, having already proven its model in NCR. They believe this scale will help the company monetize through channel margins and ad spending.
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CLSA also recently raised its price target for Zomato to Rs 353 from Rs 350, maintaining the stock as its top pick among Indian consumer companies due to its fast growth and Blinkit’s increasing market share.
From a technical perspective, Zomato is in a strong uptrend, breaking out of a flag formation. It formed a solid base around the Rs 240 breakout level. Pravesh Gour, Senior Technical Analyst at Swastika Investmart, advised investors to hold the stock with a price target of Rs 280-300 and a stop loss at Rs 240.
The immediate resistance for Zomato was Rs 280, which has now been breached. Above this level, the stock could potentially rise to Rs 300, Gour noted. He added that Rs 240 serves as major support in the event of a correction, with Rs 220 being the next critical demand level. The MACD and RSI indicators are also supporting the current uptrend.
Over the past 12 months, Zomato shares have surged approximately 186 per cent, more than doubling investors’ capital, compared to Nifty’s 28 per cent gain during the same period.
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