Results season is about to begin in full swing and various Brokerages are coming up with targets based on various factors including future operations, corporate governance, and many others.
Listed below is one stock under the ‘large-cap’ category that one should add to their watchlist for a potential upside of more than 60 percent:
Zomato Limited
With a market capitalization of Rs 1.63 lakh crores, the stocks of Zomato Limited started their trading session on Monday at Rs 184 and currently trade at Rs 185.30, gaining approximately 1.60 percent compared to its previous close of Rs 182.35 apiece.
Having a glance at the recent financials of the company, the prime business indicators, viz, operating revenues as well as after-tax profits saw a breakeven in numbers a few quarters back and the recent movements QoQ has been observed as a booming phase.
The operating revenues, on a consolidated basis, jumped from Rs 2,848 crores during Q2FY24 to Rs 3,288 crores during Q3FY24, and the bottom-line figures, during the same horizon, rose drastically from Rs 36 crores to Rs 138 crores.
Along with the same, the company enjoys a debt-free status implying no short-term interest obligations on the company.
Keeping a positive outlook for the company, ICICI Securities, one of the well-known Brokerages in India, reiterated its ‘Buy’ call on Zomato’s stock from a target price of Rs 182 to Rs 300 with the latter representing a potential upside of around 62 percent compared to the prevailing stock price level.
The rationale behind giving such a recommendation pertains to its aggressive forecasts for the longer term supported by the improved visibility of the company’s sustained growth trajectory and profitability metrics.
Zomato had remained as the ‘Top Pick’ for ICICI Securities in the Indian internet space. The Brokerage also reduced our Weighted Average Cost of Capital (WACC) to 12 percent from 12.5 percent earlier given the drastic reduction in volatility levels over the last one year.
On a contrasting note, some of the key risks highlighted by the Brokerage include discretionary spending and negative externalities that could disrupt business operations.
As per the recent presentations, the company is set to focus on expanding its footprint for Blinkit in larger cities. In addition, the company expects various factors such as monthly Transacting Customer (MTC) growth, increase in platform fee, ad income, and commission revenue to be the future growth driver.
Keeping a purview of one year, the company’s stock has delivered multibagger returns of nearly 260 percent for its stakeholders. The same means that if someone had invested Rs 1 lakh into the company’s stock a year ago, it would have converted to Rs 3.60 lakhs.
The latest shareholding data of the company portrays the Foreign Institutional Investors (FIIs) holding a considerable stake of 54.88 percent followed by the Public (retail) Investors holding a 27.98 percent stake in the company.
Zomato Limited is an online food service platform for searching and discovering restaurants, ordering food delivery, booking a table, and making payments while dining out at restaurants. The company’s segments include the Quick commerce business, Hyperpure supplies, and others.
Written by Amit Madnani
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