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

Morgan Stanley on Zomato:  American multinational investment bank Morgan Stanley has upgred 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 rising share of quick commerce in domestic retail market and Zomato’s strong execution in quick delivery services as key enabler for its future growth. Analysts believe that deeper balance sheet and prospects of a ‘large profit pool by 2030’ will drive growth of company. 

brokerage report also suggests that 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 leership and take a disproportionate share of industry's profit pool. Stock is pricing in Quick Commerce (QC) business at ~Rs 120/share, which we think is conservative,” report noted.  

Zomato likely to maintain 40% market share: Morgan Stanley

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

“We expect Zomato to maintain its ~40 per cent market share despite rising competition. We build in justed EBITDA breakeven for 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,” report noted.