Zomato Shares Fall 6.2% After Q4 Results: What Brokerages Say?

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posted on 7 months ago — updated on 1 second ago

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Zomato's shares hit an intra-day low of Rs 182.1 apiece on the BSE in the morning trade, before recovering to Rs 189 in the afternoon

Zomato’s shares on Tuesday declined as much as 6.2 per cent after the company announced its Q4 financial results. The company’s stock hit an intra-day low of Rs 182.1 apiece on the BSE in the morning trade, before recovering to Rs 189 in the afternoon.

Online food delivery firm Zomato Ltd on Monday reported a consolidated net profit of Rs 175 crore in the March quarter on the back of higher revenue. The company had posted a consolidated net loss of Rs 188 crore in the same quarter last fiscal. Its consolidated revenue from operations stood at Rs 3,562 crore. It was Rs 2,056 crore in the year-ago period.

Here’s What Analysts Say

Though Zomato’s revenue surpassed brokerage firm Emkay Global’s estimates, its margin missed expectations due to higher-than-expected ESOP costs.

Emkay maintained a ‘Buy’ rating with Zomato share price target of Rs 230 per share on a SOTP basis, valuing food delivery at ₹121 per share (DCF basis), Blinkit at Rs 93 per share (DCF basis), and cash & other investments at Rs 17 per share (BV).

Another brokerage Nuvama Institutional Equities said Blinkit’s plans to raise dark store count from 525 in Q4FY24 to 1,000 by the end of FY25. While this shall impact short-term profitability, this shall cement Blinkit as the clear leader in quick commerce.

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 Rs 245 per share from Rs 180 earlier.

Meanwhile, for the fiscal ended on March 31, 2024, Zomato’s consolidated net profit stood at Rs 351 crore. The company had posted a consolidated net loss of Rs 971 crore in the previous fiscal ended on March 31, 2023, the filing said. In FY24, consolidated revenue from operations stood at Rs 12,114 crore. It was at Rs 7,079 crore.

The results for the year ended March 31, 2024, are not comparable with the year ended March 31, 2023, due to the acquisition of Blink Commerce Pvt Ltd (formerly known as Grofers India Pvt Ltd) in June 2022, the filing said.