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Large cap stock to buy now for an upside of more than 40%; Are you holding it?

Zomato Ltd, a prominent online food delivery platform, saw a 5% increase in its shares this week after receiving bullish outlooks from various brokerages. Elara Securities even set a target price of ₹280 per share, indicating a 41% upside potential.

Elara Securities remains optimistic about Zomato due to its strong cash reserves and investments, believing that the potential acquisition of Paytm Live will not significantly impact Zomato’s liquidity. The brokerage values Zomato’s food delivery business at 55.0x one-year forward EV/EBITDA, Blinkit at 5.5x one-year forward EV/sales, and Hyperpure at 2.5x.

Zomato’s shares have shown impressive performance year-to-date, delivering 57% returns and a robust 50% return over the last six months. The company operates in 23 countries and serves an average monthly customer base of 10.7 million.

UBS has recommended a buy rating on Zomato with a target price of ₹250 per share, citing the potential acquisition as a complement to Zomato’s ‘going-out’ offerings. JM Financial also recommended a buy target of ₹250 per share, stating that the acquisition of Paytm’s ticketing business aligns well with Zomato’s offerings for going-out experiences.

The successful completion of the acquisition could elevate Zomato to the second position in the events and movie ticketing market, trailing only BookMyShow. Zomato’s shares rose more than 3% following strong support from brokerages for the acquisition plan.

While discussions with Paytm regarding the transaction are ongoing, no final decision has been made as of now. The potential deal is estimated to be between ₹1,600 crore and ₹2,000 crore, marking Zomato’s second-largest acquisition if confirmed.

DailyBubble sees the positive outlook from brokerages and the potential acquisition as key drivers for Zomato’s future growth and expansion. The company’s strong performance and strategic moves position it well in the competitive food delivery market.

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