Zomato Surges 5% in a Choppy Session; Morgan Stanley Upgrades Stock Target

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Zomato Surges 5% in a Choppy Session; Morgan Stanley Upgrades Stock Target
Credit: © Reuters.

By Malvika Gurung

Investing.com -- Food aggregator company Zomato Ltd (NS: ZOMT ) surged almost 5% on Thursday to close at Rs 140.9, amid a choppy session with the Indian equity benchmarks falling for the third consecutive day on Thursday, dragged down by IT, financial and consumer scrips.

BSE Sensex fell 0.7% or 433.1 points to end at 59,919.7, while Nifty50 shed 143.6 points or 0.8% to end at 17,873.6.

Despite the benchmark indices opening lower on Thursday, with US consumer prices highest in over 20 years, shares of Zomato zoomed almost 6% in the early trade session today.

Zomato posted a widening loss of Rs 434.9 crore for the September-ending quarter, majorly due to increasing investments focused on the growth of its food delivery business. 

However, the negative figure does not appear to waiver the analysts’ targets on the stock. The American brokerage firm Morgan Stanley (NYSE: MS ) has revised the food delivery stock to ‘overweight’ from equal-weight and has raised the stock’s target to Rs 185.

With Zomato accelerating the expansion of its core business and going big with investments in different companies despite registering losses, the brokerage expects Zomato to break even in the financial year 2024-25 and has increased its revenue forecast to 14-20% for the period.

Another brokerage firm Goldman Sachs (NYSE: GS ), bullish on Zomato’s elevated cash burn and increasing user acquisition has set the stock’s target to Rs 185.

Brokerages Macquarie and Jefferies have set an ‘outperform’ and ‘Buy’ calls on Zomato while setting their targets to Rs 183 and Rs 170 respectively.

Homegrown brokerage ICICI Securities, impressed with Zomato’s investment route, has valued it 55 times FY25 P/E.

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