After Jefferies, Credit Suisse expects 100% rally on Zomato! Should you buy this dip?

Even as stock price hit a fresh low of Rs 40.55, below the Rs 41 level that valuation guru Aswath Damodaran last year pegged as Zomato’s fair value, Credit Sussie has become second foreign brokerage in as many days, which has come out with a price target on Zomato that suggests over 100 per cent upside ahead.

Credit Suisse has maintained its ‘outperform’ rating on the stock, with a target of Rs 90. The brokerage said Zomato is on a clear road to profitability growth. It said that existing core customers would drive the food business. CS said in a duopolistic industry, the core user base will drive margins.

“Quick commerce is an adjacency, but industry winners are still not clear,” it said.

On Wednesday, the scrip recovered from a low of Rs 40.55, to hit a high of Rs 44.40, marking an 9.5 per cent intraday rebound.

CS target suggests a 112 per cent upside over the prevailing price.

A day ago, Jefferies said it remained bullish on the counter, as it felt that management has accelerated its journey towards better unit economics. It has a target price of Rs 100 on the stock, hinting an upside of 137 per cent.

“Blinkit acquisition elongates the path to profitability and despite management guidance on a break-even in food delivery, investors are not giving much benefit of doubt,” it added. “Night is darkest just before dawn.”

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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