Broker’s call: Zomato (Buy)

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Target: ₹214

CMP: ₹186.20

Zomato operates under 4 broad segments viz Food delivery, B2B supplies, Quick commerce and others (Dining out, Zomato live etc). Under food delivery, an estimated 63 million orders were delivered to 18.4 million annual transacting customers in FY24. Hyperpure is its B2B platform that offers fresh, hygienic, quality ingredients sourced directly from farmers, mills, producers and processors to restaurant partners.

The company enjoys robust brand recalls as it is a popular platform for sourcing of foods in urban areas. Over the years, the company has expanded its service offerings. Zomato acquired Blinkit in 2022 to delivery grocery products. Blinkit caters to a wide variety of customer needs starting from grocery and household essentials to multiple other categories of products.

During 4QFY24, the company has reported strong financial performance with consolidated Revenue increasing 73.3 per cent y-o-y to ₹3,562 crore while EBITDA and PAT for Q4-FY24 stood at ₹86 cr and ₹ 175 crore respectively v/s EBITDA loss of ₹226 crore and net loss of ₹188 crore respectively.

At current price, the stock trades at FY25E/FY26E consolidated PE of 110.8x/58.5x respectively based on Bloomberg consensus estimates. The valuation based on PE looks premium but growth going ahead the valuation multiple will stabilize in medium to long term as earning picks-up.