Brokerage firm Goldman Sachs raises target price of this stock, sees 30% upside potential

After the brokerage firm raised its target price, Zomato shares experienced a 3 per cent surge, reaching ₹190.4 during Friday’s trading session on the BSE.

The major contributing factor behind the upside is the growth potential of its quick commerce startup Blinkit. According to analysts at Goldman Sachs, inferred value of the grocery delivery platform acquired by Zomato in 2022, now surpasses that of Zomato’s food delivery division.

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The brokerage firm currently assesses Blinkit at ₹119 per share, which is an equity valuation of $13 billion, surpassing the valuation of the food delivery business, which stands at ₹98 per share.

It further forecasts that Blinkit is poised to experience a compounded annual growth rate (CAGR) of 53% in its Gross Order Value from the fiscal years 2024 to 2027. This growth trajectory is anticipated to fuel a 32% adjusted revenue CAGR for Zomato on a consolidated basis during the same period.

“We note that Blinkit’s implied valuation in our Zomato’s sum of the parts (SOTP) is (close to) $13 billion now, versus $2 billion in March 2023, with per share implied value of ₹119 higher than food delivery, at ₹98, for the first time,” Goldman Sachs said in its note.

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Zomato stock had climbed 1.9% to reach ₹188.2 on the BSE, on Friday’s trading session. Year-to-date, it has seen a remarkable surge of more than 50%, while over the past twelve months, it has achieved a gain of 220%.

From a technical standpoint, the relative strength index (RSI) of the stock presently stands at 54.1, indicating that it is neither in the overbought nor the oversold zone. Furthermore, the MACD is at 6.8, positioned above its center line but below the signal line.

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Published: 26 Apr 2024, 08:38 PM IST