Zomato Gets 'Reduce' As HDFC Securities Initiates Coverage — Here's Why

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

HDFC Securities Institutional Equities

In food delivery, the duopoly structure is likely to ensure eventual convergence of fortunes for the two incumbents; however, the jury is still out on the path to convergence in quick commerce.

We remain in the camp that execution variance among platforms is likely to widen in the long term with Blinkit leading the pack. For Zomato Ltd., we project a 36% consolidated sales CAGR (including 19%/65% gross sales CAGR for food delivery/quick commerce segments, respectively), with moderating adjusted Ebitdam (from 5.3% to 4.4%) as QC skew continues to rise in the mix.

RoICs are expected to be largely stable (9 to 10.5%) over FY25-27. We initiate coverage on Zomato with a Reduce rating and an SOTP-based target price of Rs 235/share (implying 6x FY27 price/sales). Note – We have reduced Swiggy’s target price to Rs 455/share (earlier Rs 475/share).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. 

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.