Whalesbook
Morgan Stanley has maintained its 'overweight' rating on Zomato, the food delivery and quick commerce aggregator, with a price target set at ₹427. This price objective implies a potential upside of 38% from the stock's closing price on Monday.
The brokerage firm highlighted that Zomato's shares currently present the best risk-reward scenario and recommended that investors utilize the present weakness in the stock to accumulate it.
Morgan Stanley's strategy aligns with Zomato's focus on doubling down on customer market share, with the belief that expansion of wallet share can follow. The firm also considered a stress case scenario, where higher aggression from Zomato could push the company back into losses from its current profitability. However, Morgan Stanley noted that this would not be a game-changer for the company's outlook or current fundamentals.
At the current price, Zomato implies a two-year forward Enterprise Value to Gross Order Value (EV/GTV) of 1.1 times for its quick commerce business, Blinkit, which is the same as it was in March. In a worst-case scenario, the stock is projected to bottom out between ₹280 to ₹285 per share.
Currently, 33 analysts cover Zomato, with 29 holding a 'buy' rating and the rest recommending a 'sell'. Zomato's shares closed 1.9% higher at ₹309.6 on Monday and have seen a 47% increase year-to-date in 2025.
Impact
This news carries significant weight for Zomato investors. A reaffirmation of an 'overweight' rating and a substantial price target from a reputable brokerage like Morgan Stanley can boost investor confidence, potentially driving positive short-term stock price movement and signaling a favorable long-term outlook.
Rating: 8/10
Definitions:
Overweight: An 'overweight' rating is an investment recommendation by an analyst or brokerage firm suggesting that a particular stock is expected to perform better than the average stock in its sector or the broader market over a specific period.
Enterprise Value to Gross Order Value (EV/GTV): This is a valuation metric used in industries like food delivery and quick commerce. Enterprise Value (EV) represents the total value of a company, typically including market capitalization, debt, and minority interest, minus cash and cash equivalents. Gross Order Value (GTV) is the total monetary value of all orders processed through a company's platform before any deductions such as discounts or fees. The EV/GTV ratio helps investors assess how the company's total value compares to the total value of goods and services it facilitates through its platform.