Zomato Share Price Target from 2024 to 2030: Is It the Next Multibagger? [2024]

Investing in stocks can be a rewarding journey if done with the right information and analysis. Zomato shares have garnered significant attention in the investment community, and with good reason. With the current share price at ₹270, analysts are projecting a target price of ₹750 by 2030. This article will provide you with detailed insights into Zomato’s share price target from 2024 to 2030, based on the company’s growth, overall performance, and future prospects.

Zomato Expands into Entertainment with Paytm Acquisition

For those interested in Zomato’s latest strategic moves, it’s worth noting that Zomato has recently acquired Paytm’s entertainment ticketing business for $244 million, a move that significantly expands its services beyond food delivery. This acquisition could be a game-changer in the entertainment sector, positioning Zomato as a major competitor to BookMyShow. Read more about Zomato’s acquisition and its impact on the market here.

What is Zomato?

Zomato is a multinational restaurant aggregator and food delivery company founded in 2008. Headquartered in Gurugram, India, Zomato began as a food discovery and ratings platform. Over the years, it has evolved into a significant player in the food delivery market, competing head-to-head with Swiggy.

Zomato: Market Leadership and Blinkit’s Rising Value

Morgan Stanley remains bullish on Zomato; says market leadership crucial for food aggregator.

Zomato’s quick commerce arm, Blinkit, has also become a bright spot, with its implied value now larger than Zomato’s core food delivery business, according to a Goldman Sachs note.

Stock Performance: Zomato’s stock has surged nearly 182 percent in the past year, almost tripling investors’ money, while the benchmark Nifty rose by only 25 percent during the same period. As of August 16, 2024, Zomato’s stock price closed at ₹264.43, showing a 1.65% increase from the previous session with a volume of over 42.9 million shares traded.

Morgan Stanley’s Outlook: Morgan Stanley has maintained its “Overweight” rating on Zomato, setting a target price of ₹278 per share, which implies a potential upside of nearly 8 percent from the last closing price. The brokerage firm emphasized that retaining market leadership is crucial for Zomato, even if it means postponing profitability. The firm views rising competitive intensity in the quick commerce business as a sign of the growing importance of this channel, though it also acknowledges that this could delay profitability assumptions.

Long-term Potential: Analysts at Morgan Stanley believe that staying ahead in the competitive landscape is essential for Zomato’s long-term success. They suggest that any short-term pullback in Zomato’s stock price due to increased competition could present a valuable opportunity for long-term investors to accumulate shares.

Operational Success: Zomato recently reported a net profit growth of 126.5 times year-on-year, reaching ₹253 crore in the April-June quarter. This was achieved through a combination of increased platform fees charged to consumers and improved operational profitability of Blinkit. The company has now reported five consecutive quarters of net profits, surpassing Swiggy in profitability.

Market Share: Zomato has gained market share in the cities of Southern states, a region historically dominated by Swiggy. Multiple brokerage firms estimate that Zomato’s market share in India’s food delivery sector has risen to around 55 percent, while Swiggy has lost ground. Zomato’s strategy of placing early bets on non-metro cities has paid off, allowing the company to surpass Swiggy in both market share and profitability.

Blinkit’s Rising Value: Zomato’s quick commerce arm, Blinkit, has become a significant growth driver for the company. After acquiring Blinkit for $568 million in 2022, the implied valuation of Blinkit has now grown to a staggering $13 billion, according to Goldman Sachs. This makes Blinkit’s value larger than Zomato’s core food delivery business.

Zomato’s Evolution and Business Operations

Zomato entered the food delivery market in 2017, a space that was already crowded with players like FoodPanda, Ola, Scootsy, and other VC-funded companies. Despite its late entry and fierce competition, Zomato, alongside Swiggy, has emerged as the last man standing in this competitive market.

Diverse Revenue Streams

1. Dining Out Platform:
Zomato operates the largest food-focused restaurant listing and reviews platform in India, where customers can search for restaurants, read and write reviews, and book tables online. As of December 2020, the platform had 350,174 active restaurant listings from 526 cities and 8,064 restaurant paid members. The primary revenue model for this segment is advertising.

2. Zomato Pro:
Zomato Pro is a customer loyalty program that encompasses both food delivery and dining-out experiences. It offers discounts to members at select restaurants for a subscription fee. As of December 2020, Zomato Pro had 1.4 million members and over 25,350 restaurant partners. This program is a significant contributor to Zomato’s subscription-based revenue.

3. Hyperpure (B2B):
Launched in 2019, Hyperpure is Zomato’s farm-to-fork supplies offering for restaurants. This service allows restaurants to procure high-quality ingredients directly from farmers and other producers. By December 2020, Hyperpure served 6,000 restaurants in six cities. The revenue model here is transaction-based, and it plays a crucial role in improving restaurant supply chains, making them more efficient and predictable.

Zomato’s Food Delivery Business

Zomato’s food delivery business, launched in 2017, has seen exponential growth. By the latest data, the platform boasts 1.31 lakh active restaurants and 1.6 lakh delivery partners. Zomato’s food delivery orders increased 13.2 times from 30.6 million in Fiscal 2018 to 403 million in Fiscal 2020. The Gross Order Value (GOV) grew 8.4 times from ₹13,341 million in Fiscal 2018 to ₹112,209 million in Fiscal 2020.

However, the first quarter of Fiscal 2021 saw a significant drop in GOV due to the COVID-19 pandemic. Despite this setback, the food delivery business recovered strongly, with a GOV growth of 91.6% and 42.3% in the second and third quarters of Fiscal 2021, respectively. The GOV in the third quarter of Fiscal 2021 was ₹29,810 million, the highest achieved in any quarter till December 2020.

Financial Data Analysis and Unit Economics

Zomato’s financial performance has been a mix of rapid revenue growth and challenges in achieving profitability. Key financial ratios include:

• PE Ratio: N/A (due to negative earnings)
• Return on Assets (ROA): -5.00%
• Current Ratio: 4.50
• Return on Equity (ROE): -10.00%

The company has seen positive contribution profits for 9MFY21, which indicates that it is moving toward profitability at the unit economics level. However, marketing, branding, and fixed operating costs remain significant challenges.

Industry Outlook and Growth Prospects

According to RedSeer, the total addressable food services market in India is expected to grow from $65 billion in 2021 to $110 billion by 2025. This growth is driven by changing consumer behaviors, reduced dependence on home-cooked food, and increasing participation of women in the workforce. Despite this positive outlook, Zomato faces stiff competition from emerging direct ordering platforms and the potential threat of Amazon Food’s expansion.

Zomato Share Price Target from 2024 to 2030

2024:

• Target Price: ₹320
• Growth Factors: Zomato’s focus on expanding its services, improving profitability, and increasing its market share is expected to drive the stock price up by around 22.5% in the coming year.

2025:

• Target Price: ₹400
• Growth Factors: Continued expansion into new markets and potential new revenue streams, such as cloud kitchens and advertising, could push the share price higher. A 25% increase is expected.

2026:

• Target Price: ₹500
• Growth Factors: As Zomato solidifies its market position, the stock could see a 25% rise. Enhancements in technology and logistics are likely to contribute to this growth.

2027:

• Target Price: ₹600
• Growth Factors: By this time, Zomato’s strategies should begin to yield substantial results, with a 20% increase anticipated as the company continues to scale.

2028:

• Target Price: ₹675
• Growth Factors: A more moderate growth of 12.5% is expected as Zomato faces increasing competition but still manages to maintain a strong foothold in the industry.

2029:

• Target Price: ₹725
• Growth Factors: As Zomato continues to innovate and expand, a 7.4% increase is projected, reflecting steady progress and adaptation to market changes.

2030:

• Target Price: ₹750
• Growth Factors: By 2030, Zomato is expected to reach its peak target of ₹750, reflecting a 3.4% increase. This target assumes sustained growth and successful navigation of market challenges.

Advantages and Disadvantages of Investing in Zomato

Advantages:

• Strong market position with high brand recognition.
• Significant growth potential in the food delivery market.
• Expanding user base and increasing business services.

Disadvantages:

• High competition in the food delivery sector.
• Volatility in earnings due to fluctuating demand and operational costs.

FAQs About Zomato Share Price

1. Who is the owner of Zomato?
Zomato is a publicly traded company with shares held by various institutional and retail investors.

2. Should I invest in Zomato shares right now?
Considering its growth potential and market position, Zomato shares could present a promising investment opportunity. However, investors should be aware of the inherent risks in the sector.

3. What is the future growth potential of Zomato?
Zomato is focused on expanding its service offerings and user base, indicating substantial future growth potential in the food delivery and restaurant aggregation markets.

4. How does Zomato compare with its competitors?
Zomato competes with other food delivery giants like Swiggy and Uber Eats. Its strong brand presence and market leadership give it an edge, but the competitive landscape remains challenging.

5. What are the risks associated with investing in Zomato?
Investors should consider risks such as market competition, regulatory changes, and economic fluctuations that could impact Zomato’s profitability.

6. How has Zomato’s financial performance been recently?
Zomato has seen significant revenue growth, but profitability remains a challenge due to high operational costs. Recent quarters have shown improvement, and analysts are optimistic about future earnings.

7. What factors could drive Zomato’s share price up?
Factors such as expansion into new markets, strategic partnerships, and improvements in profitability could drive Zomato’s share price higher.

8. What is the long-term outlook for Zomato shares?
The long-term outlook for Zomato shares is positive, with potential for substantial gains as the company continues to grow and capture market share.

Conclusion

Zomato is a strong player in the food delivery industry, with substantial growth opportunities and a robust market position. Based on our expert analysis, Zomato shares are expected to perform well in the coming years, with a target price of ₹750 by 2030. This projection represents a compound annual growth rate (CAGR) of approximately 13%, making Zomato a promising investment for long-term investors. Consider this stock as part of a diversified portfolio, keeping in mind the risks and potential rewards.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Please consult with a financial advisor before making any investment decisions.