Zomato has posted impressive results for Q2FY25, with revenues reaching ₹4,800 crore, supported by rapid expansion in segments such as Blinkit, Hyperpure, and its Going Out services.
Despite the food delivery segment's steady performance, the company's focus on other areas has helped drive this remarkable growth, boosting interest in share market investments. As the food delivery giant continues to grow, its potential in the market is becoming more evident.
An almost flat EBITDA margin accompanied Zomato's significant revenue surge as the company continues investing heavily in expanding its infrastructure. Analysts remain optimistic, highlighting the vast potential for growth in the company's various business arms. Despite this, Zomato shares dipped over 4% to ₹245.30 on the NSE at 9:21 am, reflecting market volatility.
Brokerage firms remain confident in Zomato's future, with HSBC maintaining a 'buy' rating and a target price of ₹330 per share. They cite the company's Q2 food delivery results meeting expectations, while the quick commerce segment surpassed predictions. This performance has also led experts to encourage share market investments in Zomato as the company remains aggressive in the highly competitive market.
Nomura has also issued a 'buy' rating for Zomato, with a target price of ₹320 per share. The company's quick commerce division has been a key driver of growth, and Zomato's focus on this area is expected to continue. In the near term, Zomato aims to achieve neutral EBITDA while growing its quick commerce operations. Analysts agree that this is an attractive opportunity for those looking to make a share market investment.
Zomato's Q2 report revealed a 389 percent increase in net profit, reaching ₹176 crore. Revenues grew 69 percent year-on-year, largely due to an increase in customer orders. Despite this success, the company's cash reserves have decreased from ₹14,400 crore in 2021 to ₹10,800 crore as of September 2024.
However, Zomato remains committed to expanding its infrastructure, with a goal of reaching 2,000 dark stores by December 2026. This continued growth makes Zomato a promising share market investment.
Zomato's upcoming District app is expected to consolidate its Going Out services and become the company's third-largest B2C business. This, along with their plans for a fundraise of up to ₹8,500 crore, demonstrates Zomato's commitment to staying competitive. Emkay Global has reiterated a 'buy' rating on the stock, with a target price of ₹310 per share, which offers a promising opportunity for share market investments.
While Zomato's Q2 results were strong, some analysts have lowered their EPS estimates for FY25-27 due to lower Blinkit margins and increased expenses. However, they still project a significant improvement in Zomato's PAT margins over the next three years, from 4.7 percent in FY25 to 12.9 percent in FY27. For investors considering a share market investment, these predictions suggest a bright future for the company.
Despite a 3.5 percent drop in Zomato's share price on the NSE in the previous session, the stock has risen over 106 percent this year, significantly outperforming the Nifty's 12 percent growth. Over the past 12 months, Zomato's stock has surged by 135 percent, demonstrating its resilience and potential for investors making a share market investment.
Analysts remain confident in Zomato's long-term growth, particularly in its Blinkit segment, which offers a unique opportunity to disrupt retail, grocery, and e-commerce. Although recent investments have impacted profitability, the expansion of Blinkit's dark store network is expected to drive future growth. This makes Zomato a key player to watch for those considering a share market investment.
Zomato's strong Q2 performance, coupled with its ambitious growth plans, positions the company as an attractive option for investors. With its quick commerce business and new app developments, Zomato is set to continue growing and solidifying its market presence, making it a compelling choice for anyone looking to make a share market investment.
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