Elara Capital, a brokerage firm, has identified potential untapped advertising revenue streams that could enhance Zomato’s profitability. They believe Zomato can consistently increase commissions from new restaurants, as ordering platforms and ONDC (Open Network for Digital Commerce) have not been able to scale up effectively.

In the food industry, restaurants, quick-service chains, and cloud kitchens heavily rely on aggregator platforms. These platforms charge commissions in exchange for marketing, visibility, and convenience. For Zomato, this model is expected to remain a significant source of revenue. Zomato stands to benefit from unexplored advertising avenues such as video and display advertising.

Typically, foodtech companies have generated low advertising revenue because there is only one primary advertiser on their platforms—restaurants. However, Elara Capital predicts that this segment will experience a healthy Compound Annual Growth Rate (CAGR) of over 40%, primarily driven by the adoption of ecommerce advertising.

Elara Capital’s note to investors highlights that the ongoing Cricket World Cup 2023 is expected to boost delivery volumes for food aggregators. This, in turn, will lead to improved growth rates in the medium term.

The brokerage firm expresses confidence in Zomato’s future, reiterating a “BUY” recommendation with a revised target price of Rs 140 (up from Rs 130). They note that the quick-service market has witnessed a significant increase in the number of brands and choices, particularly in burger and pizza categories. These segments are conducive to expansion due to the relative ease of opening new stores.

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Companies operating in this space are diversifying their product ranges and introducing gourmet options to cater to various consumer segments. This premiumization strategy serves two key purposes: increasing the average order value (AOV) and attracting more customers through innovative products

Elara Capital, a brokerage firm, has identified potential untapped advertising revenue streams that could enhance Zomato’s profitability. They believe Zomato can consistently increase commissions from new restaurants, as ordering platforms and ONDC (Open Network for Digital Commerce) have not been able to scale up effectively.

In the food industry, restaurants, quick-service chains, and cloud kitchens heavily rely on aggregator platforms. These platforms charge commissions in exchange for marketing, visibility, and convenience. For Zomato, this model is expected to remain a significant source of revenue. Zomato stands to benefit from unexplored advertising avenues such as video and display advertising.

Typically, foodtech companies have generated low advertising revenue because there is only one primary advertiser on their platforms—restaurants. However, Elara Capital predicts that this segment will experience a healthy Compound Annual Growth Rate (CAGR) of over 40%, primarily driven by the adoption of ecommerce advertising.

Elara Capital’s note to investors highlights that the ongoing Cricket World Cup 2023 is expected to boost delivery volumes for food aggregators. This, in turn, will lead to improved growth rates in the medium term.

The brokerage firm expresses confidence in Zomato’s future, reiterating a “BUY” recommendation with a revised target price of Rs 140 (up from Rs 130). They note that the quick-service market has witnessed a significant increase in the number of brands and choices, particularly in burger and pizza categories. These segments are conducive to expansion due to the relative ease of opening new stores.

Exciting news! We’re now on WhatsApp Channels too.  Subscribe today by clicking the link and stay updated with the latest insights in the startup ecosystem! Click here!

Companies operating in this space are diversifying their product ranges and introducing gourmet options to cater to various consumer segments. This premiumization strategy serves two key purposes: increasing the average order value (AOV) and attracting more customers through innovative products