Zomato Shares Hit Life High After UBS Upgrades Target Price With 20% Upside

Shares of Zomato Ltd. gained over 6% on Monday after UBS raised the target price while reiterating a 'buy' rating citing strong first-quarter results and guidance.

The revised target price for the delivery platform has been raised to Rs 320 per share from Rs 260 apiece earlier, which implies an upside of 20% from Friday's close.

Zomato surprised positively with not only stronger gross merchandise value growth in quick commerce but also a solid 27% growth in food delivery, it said in a note on Aug. 19. "Management was optimistic with an implicit positive guidance revision with both segments' medium term margin guidance reiterated as well."

Zomato is trading at 35 times the fiscal 2027 estimated enterprise value to Ebitda versus the average of Indian retail peers at 30 times, with a superior growth and margin expansion profile, it said.

Adding to this, at least 1.51 million shares of the company changed hands in a block trade during the market opening, according to Bloomberg.

Shares of Zomato rose as much as 6.23% to hit record high of Rs 280.9 apiece on the NSE. It was trading 3.43% higher at Rs 273.5 apiece, compared to a 0.23% advance in the benchmark Nifty 50 as of 9:36 a.m.

The stock has risen 204% in the last 12 months and 120% on a year-to-date basis. The total traded volume so far in the day stood at 2.1 times its 30-day average. The relative strength index was at 71.

Twenty-five out of the 28 analysts tracking the company have a 'buy' rating on the stock and three suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 3.7%.