Zomato shares surged over 2% on Tuesday following HSBC's decision to raise its target price for the stock from ₹260 to ₹330 while maintaining a 'buy' rating. The brokerage firm cited stabilising competition in the fast-delivery market, giving Zomato an opportunity to enhance its take rates, which is a positive signal for those looking to make a share market investment.
In the realm of quick commerce, Zomato's Blinkit platform has outpaced its primary competitor, Swiggy, in several key performance areas. Analysts at HSBC noted that while Swiggy is still navigating growth challenges, there is scope for it to expand its take rates and margins. However, they emphasised that Zomato's operational execution and Blinkit's growth trajectory provide it with a competitive edge. This is encouraging for investors exploring share market investment opportunities, especially in rapidly growing sectors.
Motilal Oswal's latest report also favoured Zomato, reaffirming a 'buy' call with a target price of ₹320, noting that Swiggy currently lags behind Zomato on critical metrics. Zomato's acquisition of Blinkit has strengthened its position in the quick grocery delivery space. In contrast, Swiggy's Instamart is showing slower expansion, losing market share to both Blinkit and Zepto. This performance gap is worth noting for anyone considering a share market investment in this sector.
Blinkit currently operates 639 dark stores across 44 cities, outpacing Instamart's 557 active stores across 32 cities. Moreover, Blinkit's gross order value (GOV) for the quarter was ₹4,923 crore, 81% higher than Instamart's GOV. Blinkit's higher take rate of 19.1%, compared to Instamart's 14.8%, and a higher average order value (AOV) further solidify its dominance. For investors, Zomato's continued performance in the quick-commerce space offers an exciting share market investment prospect.
Zomato's robust growth is evident in its financial performance, with Blinkit leading the way in profitability. Blinkit recorded an adjusted EBITDA margin of -0.1%, significantly better than Instamart's -11.7%. The differences in AOV and take rate have driven Blinkit's superior margin. For those interested in a share market investment, this performance highlights Zomato's strong fundamentals in a competitive market.
Analysts believe this is just the beginning of the quick commerce race, with ample opportunities for companies to differentiate themselves. Despite Swiggy's potential IPO looming on the horizon, Zomato remains in a favourable position. According to analysts, Zomato's food delivery business is stable, and Blinkit presents a generational opportunity to disrupt the retail, grocery, and e-commerce sectors.
Analysts forecast a revenue compound annual growth rate (CAGR) of 55% between FY24 and FY27, with profit after tax (PAT) margins improving from 4.3% in FY25 to 13.2% in FY27. These projections make Zomato a prime candidate for long-term share market investment. As of 12:55 PM on Tuesday, Zomato shares were trading over 3% higher at ₹275 on the National Stock Exchange (NSE), continuing a year-to-date rise of around 120%. The stock has more than doubled investors' wealth, far outperforming the benchmark Nifty, which has gained just 15%.
Over the last 12 months, Zomato shares have surged over 164%, making it a top performer in the market. In contrast, the Nifty index has climbed just 28% in the same period. This remarkable growth further solidifies Zomato as a compelling option for those seeking share market investment opportunities.
With HSBC's increased target price and Zomato's strong foothold in both food delivery and quick commerce, the company continues to provide investors with solid potential for future gains in the share market investment space.
For android only