Zomato shares experienced a remarkable 6 percent rise during morning trade on February 12, hitting a fresh 52-week high of ₹158.80 on the National Stock Exchange (NSE). That increase propelled the stock closer to its record peak of ₹169, accessed November 16, 2021.
The growth follows Zomato’s impressive financial performance, with the Gurugram-based food aggregator reporting a consolidated net profit of ₹138 crore for Q3FY24, a significant turnaround from the net loss of ₹347 crore in the corresponding period of the previous fiscal year.
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A key driver behind this positive trajectory was Zomato’s improvement in its contribution margin, a key profitability measure, which expanded to 7.1 percent in the December quarter. This improvement was attributed to the introduction of a platform fee for food deliveries.
As of 1:38 pm, the stock was trading 3 percent higher at ₹155.20 on the NSE. Zomato’s remarkable performance over the past year underscores its status as a multibagger stock, having grown by more than 200 percent. This stellar growth outperforms the benchmark Nifty, which has seen a relatively modest rise of 21 percent over the same period.
Brokerage firm Elara Securities downgraded the stock to “Accumulate” from “Buy”, while raising a target price of ₹165 to ₹150. “We are downgrading ZOMATO to Accumulate Buy (stock is up 50% in the last six months, largely accounting for healthy growth and profitability) with raised SOTP-TP of INR 165 from INR 150, as we have raised the target. -year fwd Food delivery EV/EBITDA to 50x (from 47x). Good execution on growth and profitability in the food/casual businesses are key to monitor. We have assigned one-year fwd. EV/sales of 6x (unchanged) and 2.5x (unchanged) to Blinkit and Hyperpure, respectively,” it said.
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According to an analysis by brokerage firm Motilal Oswal, the food delivery industry in India remains at an early stage of development, offering significant potential for expansion in the future.
“With a dominant market share and strong growth in the food delivery business and Hyperpure, we expect Zomato to report a strong 38 per cent Adjusted revenue CAGR during FY24-26,” the broker said, reiterating his ‘Buy’ call on the stock.
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Published: 12 Feb 2024, 17:29 IST