UBS Says Zomato Can Hit Rs 165

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UBS Says Zomato Can Hit Rs 165

By Aditya Raghunath

Investing.com -- Global firm UBS has a buy rating on India’s first listed food delivery platform Zomato Ltd (BO: ZOMT ) with a target price of Rs 165. That’s an upside of almost 26% from its July 28 closing price of Rs 131.2.

UBS says that Zomato’s valuation is not cheap but its growth outlook is good. “While valuations are not cheap at FY24 estimated EV (enterprise value) to sales of 17 times, but EVSG (enterprise value to sales growth) of 37 times and superior growth leaves room for upside,” it said.

Zomato listed at Rs 115 on Friday, a premium of 51% to its issue price of Rs 76. The company was so eager to hit the markets that it made its debut in four days compared to the usual six and subscription to its IPO closed.

“While FY21 was a seminal year for evolution of food delivery in India due to Covid, overall food delivery penetration (as per cent of food services market) remains low at 10% versus 20% in China, and food services industry as percent of total food spending is extremely low at 10-11% (vs 45-50% in China and US). With a total of 10 million active users and 50-70 million total online orderers, we believe India has a long runway for growth," said UBS.

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  • Ajay Uppal @Ajay Uppal
    With Losses, only UBS can recommend a BUY rating. The valuation are over-stretched in comparison to the peers. Will not sustain any correction in the market.
    Like 1

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