Shares of food delivery company Zomato touched a five-month high of Rs 66.05 in intraday trade on Thursday, up 4% on the BSE. The stock is trading at its highest level since December 5, 2022. It has gained 28% over the past month, compared with a 3% gain for the S&P BSE Sensex.

Shares of Zomato have recovered 63% from a 52-week low of Rs 40.55 hit in July 2022. It touched a 52-week high of 79.80 in June last year.

Last month, Motilal Oswal Financial Services (MOFSL) initiated Zomato with a “buy” call and a target price of Rs 70.

The brokerage said the food delivery business is still in its infancy in India, and there is plenty of room for growth. With a dominant market share and strong growth in the food delivery business and Hyperpure, it expects Zomato to post a strong CAGR of 29% in FY23-25. Although management expects it to be profitable by Q2FY24 at the latest and believes the company should break even by FY25.

The strong growth will be complemented by Zomato turning profitable in FY25, with the gross margin improving to 33.5% in FY25 from 5.3% in FY22. MOFSL said increased competition and losing senior leadership at Blinkit were areas of concern.