Shares of food service provider company Zomato are showing a boom these days. On Thursday, Zomato shares rose by 8 percent to reach close to Rs 262. However, after this, profit booking was seen in this stock and till the time of writing the news, it was trading at Rs 255.40, up 5 percent. Zomato shares have given a return of more than 160 percent in the last one year.
The reason for the great rise in Zomato shares on Thursday is that JP Morgan has increased its target on the stock from Rs 208 to Rs 340, after which there has been tremendous buying of Zomato shares. The target price of the stock is seeing a steady increase due to experts taking a positive stance on its quick commerce business Blinkit.
These experts also gave the target
At the same time, earlier this week, CLSA had increased its target on Zomato from Rs 350 to Rs 353. It said that the company is its first choice among users due to its rapid growth in India and Blinkit’s market share. On the other hand, Bernstein had declared Zomato as ‘outperform’ with a target of Rs 275. Now JP Morgan has increased the estimate for FY 25-27 by 15 to 41 percent.
Why will Zomato shares rise rapidly?
JP Morgan says the online food aggregator is leading rapid retail user transformation through service and quick commerce. The foreign brokerage said Zomato is going deep into all metro cities, has proven the model in NCR and its scale should help push monetization from channel margins and advertising spends.
What suggestion did JP Morgan give to Zomato?
On Thursday, the stock had hit a high of Rs 261.50 on the BSE, up 7.65 per cent. JP Morgan reportedly said that now that most stores are crossing the threshold of positive DS levels, more EBITDA should be made positive, giving Blinkit the license to grow faster than its competitors and existing targets.
Equirus Securities said in a note, “The entry of Flipkart and BigBasket has increased competition. Also, strong players like Zomato and Zepto are set to double their store count next year. As companies add stores in overlapping Jio, price competition and discounts may increase in the next 12 months.”
(Note- Before investing in any stock, please consult your market expert.)
Source (PTI) (NDTV) (HINDUSTANTIMES)