Zomato shares witnessed the best gains of the day on a strong Q1. Here’s Brokerage Advice

Consolidated revenue from operations grew 16% during the quarter under review to 1,414 crore 1,212 crore in the March quarter and up 67% from 844 crore a year ago. This was driven by a 10% sequential jump in its Gross Order Value (GOV) 6,430 crore in Q1FY23, which was on account of marginal increase in order volumes and average order values.

“In our recent note, we highlighted management focus on the path to profitability. The 1QFY23 results now suggest that we underestimated the urgency, as adj. to lower levels of EBITDA loss. 1.5 billion, with break-even on food delivery. It is heartening to see this despite double-digit QoQ growth in GOV,” said global brokerage Jefferies.

Blinkit is also mirroring the trend with strong growth with a loss tracker. We will revise our estimates after the call on Tuesday, it added while maintaining its Buy rating zomato share with a target price of 100.

“The Q strengthened confidence in Zomato’s core business, with adjusted revenue growth at 14.8% QoQ, with an adjusted EBITDA break-even before anticipated. Continued traction (up 40% QoQ) at Hyperpure aided in overall revenue growth. While we like Zomato’s core business, we remain cautious for its accelerated commerce, given the high competitive intensity, unclear profitability roadmap, more complex operations and smaller TAM,” said brokerage Ambit. Have buy rating with target price 103 per.

Ambit’s note said signs of cash conservation and no further minority investments give us rest on the adequacy of cash reserves (USD 1.4 billion in 1Q) until the overall business turns EBITDA positive.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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