Zomato Share Price Target: 'Potential Doubler' In 3-4 Years? Morgan Stanley Report

Morgan Stanley on Zomato: The American multinational investment bank Morgan Stanley has upgraded Zomato's target price from Rs 278 to Rs 355 per equity share, marking an Rs 80 upside from its current market price of Rs 270 apiece. 

Gaurav Rateria, Equity Analyst, Morgan Stanley underlined the rising share of quick commerce in the domestic retail market and Zomato’s strong execution in quick delivery services as the key enabler for its future growth. Analysts believe that the deeper balance sheet and the prospects of a ‘large profit pool by 2030’ will drive the growth of the company. 

The brokerage report also suggests that the market potential of quick commerce along with ‘category expansion and wallet share gains’ will be beneficial for Zomato’s quick commerce arm Blinkit. 

“Despite high near-term competitive intensity, we expect Zomato to retain market leadership and take a disproportionate share of the industry's profit pool. Stock is pricing in the Quick Commerce (QC) business at ~Rs 120/share, which we think is conservative,” the report noted.  

Zomato likely to maintain 40% market share: Morgan Stanley

The brokerage report also shared that Zomato is likely to maintain its dominant market share despite rising competition in the quick commerce category. With networks like ONDC partnering with MagicPin, Paytm, and PhonePe, the competition is rising but analysts at Morgan Stanley believe that the ‘aggressive expansion’ will help the company to improve its EBITDA margins in the longer run. 

“We expect Zomato to maintain its ~40 per cent market share despite rising competition. We build in adjusted EBITDA breakeven for the next two to four quarters, implying substantial investments in aggressive expansion. We assume margins of 2.2 per cent by F2027 and ~5.1 per cent by F2031, implying an annual profit pool of close to $1bn for this business,” the report noted.