The shares of one of the leading online food delivery platform providers gained nearly 5% this week after several brokerages reiterated their bullish view on the company, followed by Elara Securities target with a 41 percent upside.
On Friday, Zomato Ltd shares were trading at ₹198, up 0.84 percent from the previous close on the National Stock Exchange. The company has a market capitalization of ₹ 1,72,656 crore.
Elara Securities has reiterated its bullish stance on Zomato to ₹ 280 per share with an upside of 41 percent based on wednesday’s trading price of ₹198. CNBC TV 18 reported.
Elara Securities remains optimistic about Zomato due to its robust cash reserves and investments. Therefore, it believes that the potential acquisition of Paytm Live may not significantly affect Zomato’s liquidity.
Elara values Zomato’s food delivery business at 55.0x one-year forward EV/EBITDA, Blinkit at 5.5x one-year forward EV/sales and Hyperpure at 2.5x.
Zomato shares have shown strong performance year-to-date, delivering 57 percent returns, and a robust 50 percent return over the last six months.
Zomato Limited is a prominent online food service platform known for its significant food sales volume. Its services encompass food delivery, dining-out options, loyalty programs, among others. The company operates across 23 countries, serving an average monthly customer base of 10.7 million.
UBS has recommended a buy rating on Zomato with a target price of Rs 250 per share, citing that the potential acquisition complements Zomato’s ‘going-out’ offerings. The brokerage finds the valuation of this acquisition to be reasonable based on initial calculations.
JM Financial has recommended its buy target for Zomato to ₹250 per share, citing that the acquisition of Paytm’s ticketing business aligns well with Zomato’s offerings for going-out experiences. The brokerage indicated that initial assessments indicate the acquisition’s valuations are reasonable.
According to JM Financial, the successful completion of acquisition would bolster Zomato’s going-out portfolio, particularly Zomato Live, which competes directly with Paytm’s event ticketing segment. The acquisition could potentially elevate Zomato to the second position in the events and movie ticketing market, trailing only BookMyShow.
Zomato’s shares rose more than 3 percent on June 19 following strong support from brokerages for its plan to acquire Paytm’s ticketing business.
Zomato acknowledged discussions with Paytm regarding the transaction mentioned above. However, as of June 18, no final decision has been made that would require board approval or legal disclosure.
While neither Zomato nor Paytm has disclosed the transaction’s valuation, media reports estimate the potential deal to be between ₹1,600 crore and ₹2,000 crore. If confirmed, this would mark Zomato’s second-largest acquisition since it acquired Blinkit in 2022 for $569 million in an all-stock transaction.
Written by Omkar Chitnis
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