Zomato Limited shares saw a 2.7% surge in trading on December 4, reaching Rs 287, following a positive report from global brokerage firm CLSA. The firm retained its outperform rating on Zomato and raised the stock's target price to Rs 370, indicating an upside potential of over 32% from its last close of Rs 280.

Impressive Performance Metrics
CLSA highlighted robust growth in Zomato’s food delivery and quick commerce segments, especially through its subsidiary Blinkit. Swiggy, its primary competitor, showed a 30% year-on-year (YoY) rise in B2C gross order value (GOV) in Q2 FY25, while Blinkit reported a 122% YoY increase in GOV, surpassing Swiggy's 76% growth.

In food delivery, Zomato's GOV rose 21% YoY, outpacing Swiggy's 15% increase. On a sequential basis, both platforms recorded similar improvements, with Zomato achieving a 5% rise compared to Swiggy’s 6% growth. Despite Swiggy narrowing the gap, Zomato remains a leader, with 81% larger quick commerce GOV.

QIP Fundraising for Expansion
Last week, Zomato raised Rs 8,500 crore through a Qualified Institutional Placement (QIP) by issuing 33.65 crore shares at Rs 252.62 per share. A significant portion of these funds, Rs 2,137 crore, is allocated for Blinkit’s expansion, particularly investments in dark stores and warehouses. Additional capital will bolster advertising and marketing to solidify Zomato’s foothold in the food delivery and quick commerce markets.

Market Response and Growth Outlook
Zomato’s stock has gained an impressive 131% since the start of the year, supported by strategic investments and a strong performance in key markets. The expansion of Blinkit, backed by new capital and innovative strategies, has positioned Zomato to lead in the growing quick commerce space.

The company’s success in maintaining its edge over Swiggy reflects its ability to adapt to market demands and invest in future-ready infrastructure. CLSA’s revised target price of Rs 370 demonstrates confidence in Zomato’s growth trajectory and its efforts to scale operations across segments.

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This story reflects Zomato’s potential to capitalize on its leadership in the food delivery and quick commerce sectors, while providing insights into future growth opportunities in the competitive landscape. Stay tuned for more updates!