ZOMATO

STOCK REVIEW

Shares of leading quick commerce and food delivery majors

to and Swiggy are higher in trade on March 4, up 2.6% and 6.5% respectively, helped by a bullish note from ICICI Securities that has reiterated its Buy call on both stocks with target prices sharply higher than current levels. ICICI Securities said it has issued recommendations on Zomato and Swiggy based on its own channel checks. The quick commerce players seem to be focusing on incentivizing higher order values, ICICI Securities note said, adding that while item-wise discounting is still prevalent, it may be past its peak on a broader level. ICICI Securities also believes the fall in share prices may be due to concerns over high cash burns in the quick commerce business. The valuations, from a one-year perspective or above appear compelling, said ICICI Securities, thus the reiteration of the buy calls. The one-year target prices for Swiggy and Zomato were Rs 740 and Rs 310 per share respectively, implying a 127% and 40% upside from current levels. The ICICI Securities note also said there has been a reduction in performance marketing spends, suggesting a shift toward sustainable growth, going forward. Veteran investor Raamdeo Agrawal has pointed out that the new-age consumption names along with quick-commerce companies are expected to benefit from the person income tax relief announced during the Union Budget. In conversation with CNBC-TV18 on February 1, Raamdeo had said he sees additional money accumulating in the hands of the taxpayers, thus boosting consumption.