Brokerage Views: Bernstein, Emkay On Zomato, Nuvama On Mphasis And More

Four brokerages hold a favourable stance on Zomato Ltd. after it announced it will acquire Paytm's entertainment, sports and ticketing business.

Meanwhile, Nuvama upgraded Mphasis to a 'buy' rating as expected Federal Reserve rate cuts in September are likely to lead to a revival in tech spending by clients in the United States.

NDTV Profit tracks what brokerages are putting out on stocks and sectors. Here are all the top calls from analysts you need to know about on Thursday.

Zomato Buys Paytm’s Entertainment Ticketing Businesses, Insider and TicketNew, For Rs 2,048 Crore

Bernstein On Zomato

• Maintained an 'outperform' rating on the stock with a target price of Rs 275 per share, indicating a 6% potential upside.

• Paytm’s ticketing business was acquired for Rs 2,098 crore.

• Acquisition will expand the addressable market for Zomato into event ticketing business.

• Ticketing business grew 29% year-on-year to more than Rs 2,013 crore in gross merchandise value in fiscal 2024.

• Margins were at 1.5% adjacent to Ebitda with more than 10 million transacting users generating higher than 78 million tickets.

Nomura On Zomato

• Retained a 'buy' rating with an unchanged target price of Rs 280 per share.

• Haven't incorporated the newly-acquired business in their price target calculation.

• Key driver for Zomato’s share price in the near-term is the continuing growth momentum in quick commerce.

• Expects 100% CAGR in gross order value over fiscals 2024-2026.

• Food delivery business clocks steady 20% to 25% annual growth in the medium term.

• Key risks include: capital allocation of Rs 1,259 crore, slowing growth in food delivery and quick commerce businesses.

• Smooth integration of the acquired businesses into the new District app.

• Cash burn initially to incentivise the users to migrate from Paytm’s app to Zomato and District apps.

Stocks To Watch: Zomato, Paytm, Kalyan Jewellers, IREDA And India Grid Trust

Emkay On Zomato

• Retained 'buy' rating on the stock with a target price of Rs 270 per share.

• Acquisition gives size and scale to Zomato's going out business.

• Acquisition acting as an additional growth engine over the medium-to-long term.

• Lends credence to the company's aim of building a one-stop destination for the 'District' app.

• Management’s strong execution track record grants confidence.

• Will consider the acquisition in estimates after deal closure.

Elara On Zomato

• Maintained 'buy' rating on the stock with a target price of Rs 320 per share, indicating a potential upside of 23% from the last price.

• Currently values going-out business at Rs 4,500 crore after assuming consolidation of the Paytm business.

• Online ticketing market for live events (sports and concerts) is valued at Rs 9,900 crore.

• There is potential for the ticketing business to report a healthy CAGR of 15-20%, the brokerage said.

• BookMyShow and Paytm combined account for around 85% to 90% of online bookings for multiplexes.

• Higher ticket prices on premium content would drive convenience revenue.

• BookMyShow may remain the market leader in the entertainment ticketing business.

• Paytm is one-fourth the size of market leader BookMyShow.

• BookMyShow generates an Ebitda margin of 13% versus Paytm Live’s 10%.

• The live ticketing business will continue to account for a larger share of revenue for both aggregators, it said.

• Zomato’s live business has annualised run rate of Rs 400 crore, will move up by 75% to Rs 700 crore post acquisition.

• Do not expect any major revenue or an earnings upgrade.

• Zomato has a healthy cash and investment pile of Rs 12,400 crore as of fiscal 2024.

• Potential acquisition of Paytm Live may not mar its liquidity.

Nuvama On Mphasis

• Upgraded rating to 'buy' with a target price of Rs 3,500 apiece, implying a potential upside of 15% from the previous target.

• It now contributes only 3% to the top line, from 28% in fiscal 2019.

• Taking giant strides to capture early-mover advantage in the artificial intelligence space.

• See Mphasis at an inflection point.

• Factors that led to underperformance in last two years, likely to reverse.

• Interest rate cuts are likely to lead to a revival in tech spending by the United States.

• Has backfilled DXC channel with growth in other verticals and clients.

Stock Market Live: GIFT Nifty Trades Near 24,900; Zomato, Paytm, Kalyan Jewellers, IREDA In Focus. Read more on Business News by NDTV Profit.