Nomura has reiterated its ‘Buy’ rating on Zomato, setting a target price of ₹290, indicating a potential upside of 26% from the current market price (CMP) of ₹230.70. Here’s a detailed look at Nomura’s assessment:
Key Observations:
- Quick Commerce (Q-Commerce):
- Competition in the Quick Commerce segment is intensifying, but Zomato Blinkit is well-positioned to remain among the top two players.
- The company is advancing its store opening targets by a year, signaling aggressive expansion and commitment to capturing market share.
- Food Delivery (FD) Business:
- Growth in the food delivery segment has slowed, reflecting broader market trends.
- However, the business has surprised with significant profitability improvements, which is seen as a positive development.
- Strong Execution in Blinkit:
- Blinkit, Zomato’s quick commerce arm, benefits from strong execution capabilities and a robust balance sheet, both of which provide it with a competitive edge in a fast-growing but crowded market.
Nomura’s Perspective:
- Despite the challenging competitive landscape in quick commerce, Zomato’s strategic execution, profitability gains in food delivery, and financial strength position it well for long-term growth.
- Advancing Blinkit’s store opening targets highlights its proactive approach to scaling the business rapidly.
Conclusion:
Nomura remains optimistic about Zomato’s growth potential, supported by its leadership in food delivery and robust execution in quick commerce. At a target price of ₹290, Zomato offers a compelling upside for investors.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisor before making any investment decisions.