Analysts Race to Catch Up with Zomato, the World's Top Takeaway Stock

(Bloomberg) Zomato Ltd. has risen more than all the world's major takeout stocks in the past year, and analysts are scrambling to raise their outlook for the Indian company as its profitability improves.

Top Reads from Bloomberg

• Israel vs. Iran - What would an all-out war look like?

• Texas warns of possible power emergency next week

• Israel Could Benefit from Iranian Missile Attacks

• Israel's New Approach to the Multi-Front War with Iran

• $150 billion fortune backs Qatar royal family at critical time

Zomato has seen its target share price rise more than any other stock in Bloomberg Intelligence's ratings of its global shared mobility and takeout peers over the past 12 months. At least five brokerages have raised their expectations for the company's stock in the past few weeks, including Citigroup Inc.

Zomato's shares have soared nearly 2,60% since April last year, making it hard for consensus to keep up, but expectations are still rising. Analysts have switched their earnings estimates from a previously expected loss to a profit, and optimism about the company's core food and beverage takeout business is growing.

Goldman Sachs Group Inc. He said that while "earlier investor talk suggested they were skeptical about the profitability of this business model," that concern should ease as more industry reports are released.

Some believe Zomato's bull run has been stretched and the stock is showing technical signs of overheating. In addition, Zomato's forward price-to-earnings ratio of 115 times is much higher than that of global peers such as Uber Technologies Inc. and Deliveroo Plc, as well as American Express.

Analyst Rahul Jain of Dolat Capital Market Ltd. said that the shares of the Indian company are priced for a profit of more than 300 million dollars, while it has just recently achieved break-even. According to data compiled by Bloomberg, 4 analysts have a Sell rating on Zomato, while 24 analysts have a Buy rating, and none have a Hold rating.

Analyst Abhisek Banerjee at ICICI Securities Ltd. opined that Zomato's high valuation seems to be justified in light of the company's "substantially higher" projected revenues and profits. The broker added that Zomato's share price has largely moved in line with Doordash Inc.'s, as global tech sentiment has improved over the past six months.

Banerjee also pointed out that there has been a recent realization of the huge potential of speedy commerce, including cargo delivery. According to analysts at ICICI Securities, Zomato's biggest competitor is the unlisted Zepto, and the Indian market is expected to grow at a compound annual growth rate of 29%, reaching $36 billion by March 2033, according to the analysts at ICICI Securities.

Most Read by Bloomberg Businessweek

• How 21-point masters beat the aging challenge

• Battle for AI Supremacy in the Middle East Measured by Data Centers

• Cocoa's rise attracts African farmers to replant beans

• Toyota Hopes to Beat Ford and Hyundai with Revamped 4Runner

• Everyone gets rich, no one is happy. Professional Golf is back!

Copyright ©2024 Bloomberg Intelligence.