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Zomato Joins CLSA’s 'High Conviction' List at ₹400

Zomato Ltd has been added to CLSA’s 'high conviction' list, with the Hong Kong-based brokerage firm reiterating its 'outperform' rating and raising the target price to Rs 400 per share. This new target implies a significant 64% upside from the current levels, positioning Zomato as a key player in the quick commerce and food delivery sector amid ongoing market corrections.
The Zomato stock's recent decline, having dropped 20% from its 52-week high, presents a strategic buying opportunity, according to CLSA. The brokerage anticipates robust growth in the quick commerce sector, projecting a 51% revenue compound annual growth rate (CAGR) from FY24 to FY27. Despite a potential short-term dip in Zomato's Q3 quick commerce margins due to aggressive expansion, CLSA remains optimistic about the company’s long-term profit potential.
In contrast, Jefferies recently downgraded Zomato shares to 'hold,' pointing to a sharp rise in the stock through 2024 and growing competition in the quick commerce space. Jefferies predicts a more moderate 2025, suggesting the stock may enter a consolidation phase. Reflecting this cautious outlook, Jefferies reduced its price target for Zomato by 18% to Rs 275.
Earlier, Macquarie maintained its 'underperform' rating on Zomato, citing risks that could potentially halve the stock’s value, even as the stock experienced a rally. Despite these mixed views, Zomato shares saw a remarkable surge of over 123% in 2024, climbing from Rs 124 at the beginning of the year to Rs 278 by year-end.
Conclusion
While differing opinions from analysts highlight potential volatility, CLSA’s bullish outlook and substantial upside target offer an optimistic perspective for Zomato investors. The anticipated growth in the quick commerce segment underscores Zomato’s strategic position in the market.
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