Hold Eternal Ltd For Target Rs. 230 - Axis Securities Ltd
Est. vs. Actual for Q4FY25: Revenue – BEAT ; EBIT Margin – MISS ; PAT – MISS
Change in Estimates post Q4FY25 (Abs.)
FY26E/FY27E: Revenue: -1%/-3%; EBITDA: -35%/-18%; PAT: -31%/-21%
Recommendation Rationale
NOV growth: Zomato's B2C business reported a 5% QoQ and 53% YoY increase in net order value (NOV), reaching Rs 17,440 Cr. The company’s consolidated revenue grew 64% YoY and 8% QoQ to Rs 5,833 Cr in Q4FY25, primarily driven by strong growth in the Quick Commerce segment, which saw a 121% YoY (22% QoQ) rise in NOV. Meanwhile, the Food Delivery NOV grew 14% YoY but declined 3% QoQ, falling short of the expected +20% YoY growth due to subdued consumer sentiment.
Blinkit witnessing competitive intensity : Blinkit reported losses of Rs 178 Cr in Q4FY25, compared to Rs 103 Cr in Q3FY25, against earlier expectations of near-term breakeven. The increase in losses was attributed to an accelerated pace of store expansion in response to rising competition in the Q-commerce segment. The company added 294 stores during the quarter—the highest addition in any quarter—taking the total store count to 1,301, and remains on track to achieve its target of 2,000 stores. Management reiterated that 40% of the existing 1,301 stores remain underutilised. Additionally, marketing spends increased due to heightened competitive intensity, which is expected to weigh on profitability in the near term.
Food delivery outlook: NOV was below expectations on account of weak consumer sentiments. However, the management remains confident in the longer-term guidance of 20% GOV growth on a yearly basis.
Sector Outlook : Cautious
Company Outlook & Guidance: Near-term margin pressure is likely owing to increased competitive intensity
Current Valuation: SOTP-based P/E
Current TP: 230/share; ( Earlier TP: Rs 280/share)
Recommendation: We believe near-term profitability is likely to impact margins owing to increased competition. Hence, we downgrade the stock to HOLD.
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SEBI Registration number is INZ000161633
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