Jefferies’ Chris Wood adds Zomato to India portfolio; HDFC Life makes exit

Christopher Wood, global head of equity strategy at Jefferies, has chosen the food delivery app Zomato for its India long-only portfolio. The weight of the stock is 4%. On the other hand, Wood has moved away HDFC life insurance from the same.

According to a May issue of Jefferies’ Greed & Fear, Zomato has also been added to the global long-only equity portfolio, paid for by cutting its investments in JD.com and Alibaba by 2 percentage points each.

Its Asia ex-Japan long-only portfolio includes Zomato and SBI Life Insurance have found a place as investments in HDFC Life Insurance and Standard Chartered are withdrawn, the Jefferies report said.

Wood has also gained 2% in weight REC and the weight gain is at the expense of the Oil & Natural Gas Corporation.

The move comes after the top investor acquired a private lender axis bench and mid-cap stocks Thermax Limited for its India long-only portfolio. The shares are weighted at 5% and 6%, respectively. Investments in AIA Group, Bank Central Asia, Bajaj Finance, Godrej properties And Macrotech developer are also all increased by one percentage point, according to the Greed & Fear report.

Zomato is back in the spotlight for many top brokers after the grocery delivery platform reported earnings for the fourth quarter of fiscal 2023, trimming its losses year-over-year and the previous quarter.

Below are brokerage views:

Goldman Sachs: Buy | Target: Rs 82
The overseas brokerage firm has a “buy” stance on Zomato with a target price of Rs.82. The company’s fourth-quarter earnings beat Goldman Sachs’ expectations on several metrics. The brokerage firm noted an improving outlook for growth and earnings.

Emkay: Buy | Goal: 90 rupees
We remain with Zomato at a purchase price of 90 rupees/share. The excellent fourth quarter performance reinforces our belief in Zomato’s ability to execute and deliver profitable growth. Improving consumer sentiment is expected to drive GOV/MTU growth.

Nomura: Reduce | Target: Rs 45
Nomura maintains a “cut” on Zomato shares with a target price of Rs.45, a 30% downtrend. We factor in a weaker FD business outlook and stronger Q-Commerce growth and higher CM margin in grocery delivery, resulting in lower EBITDA loss in FY24F.

Our DCF based price target of Rs.45 remains unchanged. In our view, achieving high GOV growth and strong CM improvement in core FD business remains a challenge. The main risks are stronger than expected GOV growth in FD business and faster break-even in Q-commerce.

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not reflect the views of The Economic Times.)