Divergence of opinion makes market. Here are bullish and bearish arguments for Zomato shares after a double-digit fall that was seen on January 24, 2022 trade.

Share Market Live

NSE

JPMorgan has written that with interest rates yet to settle down, it is too early to bottom fish on Zomato because significant part of their future cash flows are going to come much later in their overall model and as a result of which the sensitivity of Zomato and a lot of these platforms is much higher to interest rates increasing. The firm has taken the weighted average cost of capital (WACC) at 10.7 percent and if the interest rates are resilient, the current WACC could be around 12.7 percent. If one uses that in the overall model, there could be a price of Rs 84 on the stock. The firm is underweight on the stock with a target price of Rs 120. JPMorgan believes once interest rate settles only then will be a good time to bottom fish.

Also Read:

I have been waiting for a bear market, Zomato CEO tells employees amid steep fall in stock price

On the other hand, Kotak Mahindra Bank says that this decline is largely on account of global factors. Deliveroo, DooDash, Delivery Hero have fallen anywhere between 25 percent and 27 percent, so this decline is not only exclusive to Indian stocks. The firm believes that this sharp correction offers a buying opportunity. Kotak Mahindra Bank is positive on the stock with a target price of Rs 170.

Watch the accompanying video of CNBC-TV18’s Mangalam Maloo for more details.

Catch all stock market updates here

First Published:Jan 25, 2022 1:56 PM IST