The shares of Zomato hit a 20-month high in Thursday’s trade as brokerages remained upbeat on its prospects .
The food delivery firm on Thursday hit a peak of Rs 113.25 on the BSE which reportedly was the highest since January 24, 2022, a gain of 3.80 per cent over its previous close.
The counter subsequently closed at Rs 109.80 — a rise of 0.64 per cent.
Analysts at ICICI Securities and Kotak Institutional Equities have raised their target price which implied a likely upside of up to 50 per cent.
“We re-iterate our buy rating on Zomato and increase our 3 stage DCF-based target price to Rs 160 from Rs 120 led by earnings upgrades, given improved visibility of profitability and sustained improvement in the underlying operating metrics. Zomato remains our top pick in the Indian internet space,’’ analysts at ICICI Securities said in a report. DCF or discounted cash flow is a valuation methodology that forecasts the value of a particular investment on the basis of the expected future cash flows.
The brokerage further pointed out that while there has been an improvement in the profitability of its food delivery business over the last 3-4 quarters, this was driven by strong growth in ad-revenues.
Kotak Institutional Equities also has a buy rating on the stock and it revised the target price to Rs 125 from Rs 110, thus implying an upside of nearly 14 per cent from its current market price.
