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Hungry for Gains? ICICI Securities Dishes Out a ₹310 Target on Zomato

Updated: April 24, 2025 11:31

Image Source: The Hindu Business Line
ICICI Securities reaffirmed its positive view on Zomato, with a 'Buy' call and increasing its target price to ₹310. The brokerage is optimistic on the back of Zomato's strong financials, leadership in food delivery, and promising future in quick commerce even after recent sector turbulence.
 
Major Points:
  • Target Price & Valuation: ICICI Securities' revised target price of ₹310 is arrived at using a three-stage DCF model with assumptions of 11.5% WACC and 5% terminal growth. The current market price is approximately ₹235, which suggests a potential upside of more than 30%.
  • Strong Financials: Zomato reported a consolidated total income of ₹5,657 crore for the quarter ended December 2024, up 12.7% sequentially and 61% year-on-year. Net profit after tax for the quarter stood at ₹59 crore, reflecting the company’s improving profitability.
  • Quick Commerce Outlook: Although the journey to profitability in quick commerce (Blinkit) has been postponed due to increased competition, Zomato's fast build-out of its dark store network is regarded as a strategic entry barrier, setting the company up for medium-term success.
  • Market Leadership: Zomato's food delivery business continues to grow profitably, with segment profit rising by 67% YoY and adjusted revenue up 17% in Q3 FY25. The company is considered the leading player in hyper-local e-commerce in India.
  • Risk-Reward Profile: ICICI Securities considers the risk-reward profile (3:1) favorable with a bull-case of ₹350 per share and a bear-case of ₹210.
  • Sector Sentiment: While there have been recent corrections on concerns over rapid commerce losses and competition, ICICI feels these are overbaked and anticipates a strong recovery on the back of increasing discretionary consumption and sector tailwinds.
Sources: Economic Times, Business Today, Inc42

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