Zomato’s net loss widened to Rs 429.6 crore during the quarter ended September 30 under review, even as shares of Zomato traded higher on Thursday after the food delivery firm reported better-than-expected topline figures for the quarter.
Net loss stood at Rs 229.6 crore in the year-ago quarter and Rs 356.2 crore in the preceding quarter ended June 30.
Zomato posted 21.29 per cent quarter-on-quarter (QoQ) and 140.42 per cent year-on-year (YoY) growth in consolidated revenue at Rs 1,024.20 crore in Q2FY22, on the back of investments in the growth of its food delivery business.
The big question investors is asking now is. should you buy, sell or hold Zomato?
Brokerages on Dalal Street see up to 60 per cent upside in Zomato post Q2 result. According to ICICI securities, Zomatos September quarter revenue growth was incredibly strong and way higher than expectations.
It further added that increase in delivery cost (Rs 5 per order) and higher Employee Stock Ownership Plan (ESOP) expenses led to Rs 160 crore higher EBITDA loss against the previous quarter. It has set a target price of Rs 220 for Zomato post Q2.
On the other hand, Morgan Stanley has upgraded the stock to overweight from equal weight. It has also raised the target price for Zomato to Rs 185 from Rs 140 earlier.
It believes that acceleration in the core business, doubling down on investments despite losses are key triggers for the stock. Morgan Stanley also revised revenue forecasts by 14 per cent-20 per cent for FY22-24.
Zomato may break even by FY25, according to experts.