Shares of food aggregator Zomato gained traction on Friday, triggered by the news of an investor meeting as well as amid reports of a revision in discounts by ONDC (Open Network for Digital Commerce) beginning June 1.
Zomato share price surged as much as 7.7% on Friday to hit an intraday high of ₹73. During the session, the scrip opened higher at ₹69.40, as against the closing price of the previous session at ₹67.92. The scrip closed 4.81% higher at ₹71.19 on Friday. At its current price, Zomato’s stock is 5.7% lower than the 52-week high of ₹75.55, which the company touched on November 14 last year. The share price is 80.5% higher than the 52-week low of ₹40.55, which the company touched on July 20 last year. During the session, the company’s market capitalisation stood at ₹61,075.23 crore as 65,56,991 shares exchanged hands on the BSE as against the two-week average of 45.61 lakh shares. In the past one month, the counter has given 12.41% returns, and 30.43% return in the past 3 months.
Beginning June 1, ONDC is reportedly offering a maximum price incentive of ₹100 per order from the previous ₹120 per order in its food delivery platform. The minimum order value, in order to avail the incentive would be ₹200 in the food and average category, whereas ₹300 will be the minimum order value for other categories.
ONDC forayed into food delivery space last month. It is touted to be a major rival of online food aggregators Zomato and Swiggy owing to the eye-catching discounts offered by the former. In the past few weeks, several users of the ONDC food delivery platform have taken to social media talking about this price difference. At present, Zomato and Swiggy charge 25-30% commission from the restaurants, whereas ONDC charges 2-4% commission from the restaurant.
ONDC was launched in line with the government's start-up India initiative on December 30, 2021, to curb the presence of digital monopolies in the domestic ecommerce market. ONDC aims to promote open networks for all aspects of the exchange of goods and services over digital or electronic networks and caters to larger numbers of traders, categories of goods, geographies and companies.
Brokerages upbeat on Zomato
Christopher Wood, Global Head of Equity Strategy, Jefferies has picked up Zomato in his India Long-only portfolio, at a weightage of 4%. The stock has also been included in Jefferies' May edition of ‘Greed & Fear’.
Zomato's consolidated net loss for the March quarter for FY23 narrowed to ₹187.6 crore, registering a decline of 48% year-on-year (YoY), as against ₹359.7 crore in the same period last year. The company's revenue from operations during the quarter under review surged by 70% to ₹2,056 crore as against ₹1,211.8 crore in the same period last year. Of this, the company’s food delivery business reported revenue of ₹1,530 crore during the quarter under review, whereas the revenue for its quick commerce business stood at ₹363 crore. The revenue for the company's business-to-business segment stood at ₹478 crore. The company's gross order value stood at ₹6,569 crore in the March quarter.
Most of the analysts have become upbeat on the stock with a ‘BUY’ rating. Analysts at ICICI Securities have revised the target price of Zomato’s stocks to ₹83 from ₹75 while maintaining a 'BUY' rating. Nuvama Institutional Equities has set a target price at ₹94 with a ‘BUY’ rating. Motilal Oswal has set a target price of ₹80 for Zomato, with a ‘BUY’ rating and a 24% potential upside.
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