Goldman Sachs Ups Zomato Target, Stock Soars on Blinkit Optimism

Goldman Sachs has raised the target price for Zomato Limited to Rs 240 from Rs 170, while maintaining a 'buy' rating on the food delivery aggregator's shares. This revision indicates a significant potential upside, following Zomato's increase of its platform fee by 25% and its consistent delivery of over 2 million orders per day. Goldman Sachs has highlighted the growth prospects of Zomato's quick commerce business, Blinkit, suggesting its valuation now exceeds that of the core food delivery service. Blinkit's gross order value (GOV) is forecasted to grow by 53% from FY24 to FY27, contributing to Zomato's expected 32% compound annual growth rate (CAGR) in adjusted revenue during the same period.

The revised target price comes amidst a broader evaluation of stocks by various brokerage firms. While Goldman Sachs remains optimistic about Zomato, it has a neutral stance on Nestle India, with a reduced target price, and JPMorgan has raised its target for Tech Mahindra, citing a strong performance. Zomato's stock performance has been notable, with a surge of over 50% year-to-date and a 220% increase over the past year.

According to research by Zee Business, the acquisition of Blinkit by Zomato in 2022 at a valuation of $600 million has seen an increase to $13 billion. This substantial rise underscores the market's potential underestimation of Blinkit's growth and profitability. The growth in Blinkit's valuation is aligned with the expanding quick commerce market in India, and Zomato's shares traded higher following these positive assessments by Goldman Sachs.