Shares of Zomato Ltd. surged 1.74% in early trading on November 18, reaching INR 274.30 apiece on the Bombay Stock Exchange (BSE), following an optimistic forecast from global brokerage firm Morgan Stanley. The firm projected that Zomato’s stock could potentially double in value within five years—or even achieve such growth in less than three years under a more bullish scenario.
Morgan Stanley’s upbeat outlook is based on Zomato’s strong market position, especially in India’s fast-growing quick commerce sector, along with its leadership in food delivery. In a note to investors, the firm reiterated its “overweight” rating on the stock and elevated its target price to INR 355, up from INR 278 previously. This revision reflects Zomato’s dominant presence in the food delivery space and its growth potential in the quick commerce market, which is expected to expand rapidly in the coming years.
According to Morgan Stanley, Zomato is well-positioned to capture a significant share of India’s expanding retail quick commerce market. With increasing consumer demand for faster delivery services, Zomato’s quick commerce business—especially its Blinkit platform—has been showing strong growth. The brokerage firm highlighted Zomato’s “deep balance sheet” as a key factor that will help the company navigate near-term challenges, including fierce competition and the high cost of expansion.
Morgan Stanley’s report also pointed out Zomato’s robust food delivery business, which continues to perform well despite these challenges. Zomato’s loyal customer base and solid operational metrics provide a strong foundation for future growth. The brokerage firm further emphasized that Zomato’s ability to maintain market leadership in both food delivery and quick commerce could lead to even more substantial growth than currently projected.
The optimism surrounding Zomato is backed by impressive financial results. In its most recent quarterly earnings report for Q2 FY25, Zomato reported a significant year-on-year (YoY) increase in operating revenue, which surged by 68.5% to INR 2,848 crore, compared to the same period last year. Additionally, the company’s profit after tax (PAT) saw a dramatic rise of 389%, growing from INR 36 crore in Q2 FY24.
Zomato’s food delivery business continues to perform strongly, with the gross order value (GOV) for the segment increasing by 5%, reaching INR 9,690 crore in Q2 FY25, compared to INR 9,264 crore in the previous quarter. Meanwhile, Blinkit, Zomato’s quick commerce arm, experienced impressive growth, with its GOV rising by 25% quarter-on-quarter (QoQ) to INR 6,132 crore.
Goldman Sachs, in a separate report earlier this year, estimated that Zomato holds a dominant 56-57% share of India’s food delivery market, further supporting the brokerage firm’s positive outlook on the stock. This market leadership, combined with the company’s expanding quick commerce business, is fueling expectations of continued growth in the years to come.
While there are still concerns regarding competition and the high costs associated with scaling its operations, Morgan Stanley remains confident in Zomato’s ability to deliver strong returns. The firm believes that, if the company continues to execute well and capitalize on its market leadership, Zomato’s stock could exceed expectations in the near future.
As Zomato navigates a competitive landscape and leverages its growth in quick commerce, investors are closely watching its ability to sustain this momentum, especially as it positions itself as a major player in the evolving Indian retail market.
