Zomato Ltd. This Indian food delivery and restaurant discovery platform has been on an absolute tear over the past year, leaving all the other major delivery stocks in the dust.
Zomato’s stock has skyrocketed by a jaw-dropping 260% since last April, and analysts are scrambling to keep up with the company’s incredible performance. As Zomato’s profitability continues to improve, more and more analysts are raising their outlooks and price targets for the stock.
In fact, when you look at the Bloomberg Intelligence gauge, which tracks global ride-sharing and delivery companies, Zomato has received more price target upgrades in the past 12 months than any other stock in the group. That’s a pretty clear sign that the experts are taking notice of Zomato’s potential.
Just in the past few weeks, at least five big-name brokerages have lifted their estimates for Zomato’s shares, including heavy hitters like Citigroup Inc. and HSBC Holdings Plc. It seems like everyone wants a piece of the action!
Now, here’s the really interesting part: analysts have actually shifted their earnings estimates for Zomato from expecting losses to predicting profits. That’s a huge vote of confidence in the company’s ability to grow and succeed in the long run.
But it’s not just about Zomato’s core restaurant meal delivery business. Analysts are getting increasingly optimistic about the company’s other operations, like its “quick commerce” business, Blinkit. Goldman Sachs Group Inc.’s analyst, Manish Adukia, expects profit forecasts for Blinkit to keep rising as more results come in, even though some investors were initially skeptical about the profitability of this business model.
Of course, there are always going to be some naysayers out there. Some folks think that Zomato’s stock has gotten a bit overheated, and they point to technical signs that suggest the bull run might be a bit stretched. Plus, Zomato is trading at a pretty high multiple compared to its global peers, like Uber Technologies Inc., Deliveroo Plc, and Meituan.
But here’s the thing: even though Zomato’s shares are priced at profits of over $300 million when the company only recently reached breakeven, many analysts still think the rich valuations are justified. ICICI Securities Ltd. analyst Abhisek Banerjee, for example, says that Zomato’s projected revenue and profits are “significantly higher” than those of its peers, which could explain the premium valuation.
Banerjee also points out that Zomato’s stock has basically been moving in line with Doordash Inc. over the past six months, as sentiment around tech stocks has improved globally. Plus, there’s a growing awareness of the huge potential for quick commerce, including grocery delivery, in the Indian market. ICICI Securities expects this market to grow at a compound annual rate of 29%, reaching a whopping $36 billion by March 2033.
So, what’s the bottom line? Zomato is on a roll, and it doesn’t look like it’s slowing down anytime soon. With more and more analysts getting bullish on the stock and the company’s profitability continuing to improve, it’s definitely one to watch in the global food delivery space.
Of course, as with any investment, there are always risks to consider. However, it’s difficult not to be impressed with this Indian delivery giant given Zomato’s recent performance and the growing excitement surrounding its future prospects. Who knows? Maybe we’ll all be ordering our meals through Zomato before too long!
