UBS has raised its target price for Zomato shares to INR 320, up from the previous INR 260, citing strong performance and growth prospects, particularly in its quick commerce (q-com) segment, driven by its subsidiary Blinkit. This comes after Blinkit recorded its highest-ever orders, along with impressive growth in orders per minute and gross merchandise value (GMV).
In Q1, Zomato delivered a positive surprise with robust GMV growth in q-com, soaring by 130% year-on-year. Additionally, the food delivery segment posted a solid 27% growth, both surpassing UBS expectations. The margin expansion in both segments further bolstered the company’s financial outlook.
Zomato’s management remains optimistic, with an implicit upward revision in guidance. The company is now aiming for a compound annual growth rate (CAGR) of 25-30% in food delivery and plans to double the number of its dark stores to 2,000 by the end of 2026.
UBS has also revised its GMV estimates for FY26-28e, increasing them by 20-30% for q-com and 2-3% for food delivery, reflecting the strong momentum in Zomato’s business segments. Despite trading at a FY27e EV/EBITDA multiple of 35x, higher than the average 30x for Indian consumer and retail peers, Zomato’s superior growth and margin expansion profile justify the premium.
