Zomato Shares Soar 7% on CLSA's 'Bullish' Stance

CLSA (Credit Lyonnais Securities Asia), a Hong Kong-based brokerage has maintained its stance on the restaurant aggregator Zomato Limited stock, keeping it to its "high-conviction outperformance" list. This stance has come despite Zomato's stock falling 20% from its 52-week high, to see a correction recently.

The brokerage firm has also raised Zomato’s price target from ₹370 to ₹400, a 64% increase from the stock's current level. This is also the first time Zomato has received a ₹400 target.

Zomato stock surged around 7% to its day’s high of Rs 262 on the NSE on Thursday, January 16, after the global brokerage firm reiterated its bullish stance.

Also Read: Zomato Hovers Around Bear Territory: Will Rising Competition Push It Over the Edge

CLSA’s Reasoning

CLSA expresses strong confidence in the growth prospects of the quick commerce segment, projecting rapid expansion of the entire QC profit pool over the next three years.

The brokerage believes that the quick commerce profit pool will grow rapidly, with an expected 51% compound annual growth rate in revenue and a 502% CAGR in EBITDA between fiscal 2024 and 2027, according to CLSA, Zomato's Q3 quick commerce margins may soften, but that is largely due to Blinkit's faster expansion.

Zomato Stock Price Surges

Shares of Zomato rose around 7% to Rs 262 apiece, compared to a 0.56% advance in the NSE Nifty 50. Total traded volume so far in the day stood at around 353 lakhs, which amounts to 0.11 times its 30-day average. The relative strength index was at 44.

In the past year, the stock has risen around 90%, gaining 6.5% over the past six months. However, in the last three months, the stock has declined by 12.65% and nosedived by 15.40% over the past month.

Also Read: Zomato’s Deepinder Goyal Outranks Swiggy Founders in Hurun Self-Made Entrepreneur List

How Other Firms Rate Zomato?

24 out of 28 analysts tracking Zomato maintained a 'buy' rating for the stock, one recommended 'hold' and three suggested 'sell', as per Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 25.6%.

Jefferies, the Global brokerage firm had earlier this month downgraded the shares of Zomato to 'hold', saying that 2025 could be a breather year for the stock after it doubled in value in 2024.

Macquarie brokerage firm in November had retained its 'underperform' call on the stock, despite it rallying at that time. The firm cited potential downside risks that could reduce the stock's value by around 50 percent.