Jefferies has maintained its Buy rating on Zomato, forecasting a 19% upside with a target price of Rs 335. The brokerage described Zomato’s QIP announcement as surprising yet interesting, especially given the company’s $1.2 billion in cash reserves and increasing free cash flow (FCF).
Media reports suggest that Zomato plans to raise $1 billion and has applied to the Reserve Bank of India (RBI) to cap Foreign Institutional Investor (FII) holdings at 49%. Jefferies noted that this move, if confirmed, would convert Zomato into a “domestic” company, enabling it to implement the 1P (inventory) model in quick commerce, which could improve profitability. However, the shift may also lead to stock deletion from MSCI.
Additionally, Jefferies commented on the potential for tighter control over inventory and the ability to scale new categories beyond grocery as Blinkit adopts the inventory model.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Please consult a financial advisor before making any investment decisions.
