24 Aug , 2021 By : Kanchan Joshi
Zomato shares continued to extend the fall for the second consecutive day on Monday after plunging nearly 9% in Monday's session after the mandatory 30 days lock-in period for anchor investors ended. Shares of the online food delivery platform declined over 3% to Rs123 per share on the BSE in Tuesday's opening deals, registering a fall of over 11% in two days.
Domestic brokerage and research firm ICICI Securities in a note on Monday said that it has initiated coverage with a Buy rating on Zomato, and sees Zomato as a great value stock unlike what street believes it to be. It sees huge upside on the home-grown food-delivery company's stock with a target price of Rs220 per share. Its target price bets on around 22 million Indians ordering ~4 times per month in FY25E.
"Contrary to its global peers (DoorDash and Amazon etc.), Zomato witnessed a sharp and artificial drop in key metrics during the first wave. Accordingly, we expect a robust recovery going ahead. This bounce back should more than offset the unlock-led uptick in physical channel activity the near term. Nevertheless, the normalisation of AOVs and increasing bargaining power of restaurants are key variables to watch out for," the brokerage said in a note.
In its first earnings release after last month’s blockbuster initial public offering (IPO), the food-tech company reported a net loss to Rs360.7 crore for June quarter as compared to Rs99.8 crore in-the year-ago period.
Those at Jefferies in a note post the Q1 results said that Zomato reported a strong beat on revenues led by 37% quarter-on-quarter (QoQ) in GOV (gross order value). ''While delivery business was strong, dining-out was impacted by the second Covid wave. YoY numbers are very strong given the impact of first Covid wave in the base,'' it said. The brokerage has a Buy rating on the stock with the target price of Rs175 per share (from Rs170), the note on August 10 stated.
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