Zomato stock hits fresh record high, posts gains in 14 of last 15 months; is there more upside ahead?

New-age tech stocks are making substantial gains on Dalal Street, led by Zomato, which continues to set new record highs every month. In today's session, the stock recorded another new milestone, crossing the ₹210 level for the first time to set a new all-time high of ₹214 apiece.

Today's rally has also propelled the company's market value to nearly ₹2 lakh crore, just ₹15,000 crore shy of reaching this milestone.

Remarkably, the stock has been consistently ascending since April 2023, closing positively in 14 out of the following 15 months. The largest monthly gain was recorded in April 2023 at 27%, followed by February with an 18.56% increase.

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During this bullish streak spanning 15 months, the stock has delivered an impressive return of 310% to its shareholders. In comparison, over the same period, the Nifty Next 50 has gained 94%. The rally was largely attributed to the company's improved financial performance, demonstrating consistent growth quarter after quarter.

The company's net profit has shown steady growth since the food delivery aggregator turned profitable in Q1 FY24. Subsequently, it continued to improve in the following three quarters.

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Against this backdrop, analysts upgraded their ratings on the stock, resulting in an increase in the stock's multiples.

Racing ahead of its peers

According to a recent note from brokerage firm CLSA, Zomato is outpacing its rival Swiggy in growth metrics.

The brokerage, citing Prosus's annual report (Prosus being the largest shareholder in Swiggy), noted that Swiggy’s overall gross order value (GOV) (food delivery + quick-commerce) grew by 26% YoY, which trailed behind Zomato’s corresponding growth of 36% during the same period.

It said Swiggy’s overall revenue growth of 24% YoY also fell short of Zomato’s adjusted revenue growth of 55.9% YoY. Swiggy’s trading losses decreased to $158 million in FY24, while Zomato reported a positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of approximately $5 million during the same fiscal year, it said.

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CLSA also noted that Swiggy’s core food delivery GOV grew by double digits in FY24 compared to a 22% YoY growth in Zomato’s food delivery GOV. According to the CLSA, Swiggy boasted 387,000 active delivery partners, lower than Zomato's 418,000.

In terms of dark stores, Swiggy Instamart operated 487 active dark stores, while Blinkit managed 526. The brokerage has a 'buy' call on the stock with a 12-month target price of ₹248 apiece.

Similarly, domestic brokerage firm Elara Capital also holds a 'buy' rating on the stock with a target price of ₹280 apiece.

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Meanwhile, Goldman Sachs noted that Zomato leads its peers in profitability, which positions it to either expand market share, enhance profitability further, or achieve a combination of both objectives in the future.

Earlier, it was reported that the company is in talks to acquire One 97 Communications’s movie ticketing and events business.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.