Jefferies Maintains ‘Buy’ Rating for Zomato, Highlights Optimism Over ‘District’ App Launch
Brokerage firm Jefferies has reiterated its ‘Buy’ rating for Zomato, driven by the company’s newly launched ‘District’ app, which is designed to boost its presence in the growing ‘going-out’ segment. The launch of this app marks an important step for Zomato as it seeks to expand beyond food delivery and establish a significant foothold in the leisure and entertainment market. On November 28, Jefferies set a price target of INR 335 for Zomato’s shares, reflecting a potential upside of 17.09% from the previous close of INR 286.10.
Zomato, the foodtech giant, has long been known for its food delivery platform, which has become a dominant player in the Indian market. However, with the launch of the ‘District’ app earlier in November, the company is looking to diversify its business model by capitalizing on the ‘going-out’ segment. The app, available on both Apple iOS and Android platforms, is designed to help users discover restaurants, reserve tables, and book tickets for movies, sports, live performances, and other events.
Jefferies’ bullish outlook on Zomato is largely rooted in the optimism surrounding this new app. The brokerage sees substantial growth potential for Zomato in this ‘going-out’ segment, which could quickly become the company’s third-largest B2C (business-to-consumer) vertical. As consumer behavior increasingly shifts toward integrated platforms that offer a seamless experience for dining and entertainment, Zomato’s expansion into this space aligns with broader trends in the Indian market, where consumers are looking for more all-encompassing solutions for their leisure activities.
The ‘District’ app is not just another food delivery platform; it represents Zomato’s move into the lifestyle and entertainment sphere, tapping into a larger pool of consumers who are interested in discovering and enjoying experiences outside the home. Zomato’s existing platform has a large user base, many of whom already trust the brand for restaurant reviews and food delivery. The new app builds on this by allowing users to access a wide variety of services in one place. The convenience of being able to reserve a table, book event tickets, and explore local experiences without needing to switch between different platforms is a compelling value proposition that could attract a broader audience.
Jefferies notes that the success of the ‘District’ app will depend on how effectively Zomato can scale its offerings within the going-out space. The brokerage sees the app as a potential game-changer for the company, particularly if it can capture the attention of consumers who regularly dine out or engage in live events. In addition, Zomato’s ability to offer a smooth, integrated user experience across multiple sectors will be crucial to its long-term success.
The new venture into ticketing and dining out also opens up new revenue streams for Zomato, diversifying its revenue model and reducing its reliance on the food delivery business alone. With India’s entertainment sector showing promising growth, especially in cities where dining out and attending events are part of the urban lifestyle, Zomato’s move into this space could lead to strong revenue growth.
In conclusion, Jefferies’ positive stance on Zomato reflects the company’s ability to innovate and expand into new verticals. With the ‘District’ app offering a comprehensive platform for dining and entertainment, Zomato is well-positioned to tap into the rapidly growing ‘going-out’ segment. If successful, this could drive significant growth for Zomato, making it an even more attractive investment option for shareholders.
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