Motilal Oswal has issued a buy call on Zomato Ltd., setting a target price of ₹300, reflecting confidence in the company’s growth prospects. Currently, Zomato Ltd. is trading at ₹265.7, making this a potentially attractive opportunity for investors.
Founded in 2010, Zomato Ltd. has grown into a significant player in the services sector, with a market capitalization of ₹229,528.10 crore. The company generates revenue primarily through service offerings, royalty income, and traded goods.
Impressive Financial Performance
Zomato’s financial performance has been on a strong upward trajectory. For the quarter ending June 30, 2024, the company reported a consolidated total income of ₹4,442.00 crore, marking a 16.99% increase from the previous quarter’s income of ₹3,797.00 crore. This also represents a substantial 71.04% growth compared to last year’s quarter, where the income was ₹2,597.00 crore. Additionally, Zomato reported a net profit of ₹253.00 crore, underscoring its profitability and growth.
Strategic Acquisition: Expanding Beyond Food Delivery
In recent trending news, Zomato made headlines with its strategic acquisition of Paytm’s movie and events ticketing businesses for ₹2,048 crore. This move is significant in Zomato’s efforts to diversify beyond its core food delivery services. By acquiring Paytm’s ‘TicketNew’ platform, which sells movie tickets, and the ‘Insider’ platform, which handles tickets for live events, Zomato is positioning itself as a strong competitor in India’s expansive online ticketing market.
Previously dominated by Reliance-backed BookMyShow, this market will now see Zomato emerging as a formidable player. Paytm, which has been a close competitor to BookMyShow since 2017, is exiting the ticketing business to focus on its core payments and financial services operations. This divestment follows the Reserve Bank of India (RBI) directive to wind down Paytm’s banking unit.
For Zomato, this acquisition aligns perfectly with its broader strategy to expand into non-core businesses. The company has already made inroads into restaurant table booking services and event organizing, both of which have been among its fastest-growing segments, accounting for 2% of its total revenue last year.
Future Outlook
With this strategic acquisition and its robust financial performance, Zomato Ltd. is poised for continued growth. The company’s efforts to diversify and strengthen its presence in multiple sectors make it an attractive option for investors looking for long-term gains. As Zomato continues to innovate and expand its offerings, Motilal Oswal’s target price of ₹300 appears well within reach.
