Our target price for Talabat is AED1.2 and is based on 50/50 mix of (1) DCF: WACC 11.5% (10% GCC/15% non GCC), terminal growth rate 3%, and long-term EBITDA/GMV margin at 5% (-1.7pp below 2024); (2) Target 2026e P/E of 16x (20% discount to peer median).  

Key upside risks to our TP include:    
Later-than-expected launch / Higher TAM growth from Meituan launch.             
Limited churn on high value customers.             
Company specific initiatives (e.g. AdTech, higher efficiency and cost cutting)             
Regulation changes 
Maintaining vendor-funded (rather than shifting to platform-funded) promotions            
Buybacks
 
The key downside risks to our TP include:         
Higher than expected levels of investments leading to EBITDA margin dropping below 5% longer-term (our base case)
Macro risks             
Overhang risks             
Regulation