But the question remains: Is it still a good ‘buy’? Let’s see what technical and fundamental experts have to say.
Stock Price Trend
Zomato’s share price has increased over 200 percent in the last year and over 30 percent in 2024 YTD. In comparison, the benchmark Nifty has advanced 28 percent in the last 1 year and over 2 percent in 2024 YTD.
The stock has added 14 percent in February so far, extending gains for the 11th straight month since April 2023. Between April 2023 and February 2024, the stock has grown more than 216 percent. It decreased by 4.6 percent in March 2023.
Currently trading at ₹161.25, the stock hit its 52-week high ₹168.50 on February 26, 2024. It has now soared 229 percent from its 52-week low of ₹49, effective March 28, 2023.
Meanwhile, it has risen 113 percent from its IPO price of ₹76.
Revenues
In the December quarter (Q3FY24), Zomato reported a consolidated net profit of ₹138 crore, compared to a net loss of ₹347 crore in the year-ago period. Sequentially, its net profit swelled 283 percent. Its income from operations in the third quarter of the current fiscal rose 69 percent to ₹3,288 crore in return ₹1,948 crore in the year-ago period.
The gross order value of food delivery (GOV) – the total value of all orders placed – grew 25 percent year-on-year (YoY) and the company expects GOV to continue to grow 20 percent more YoY, and may accelerate further if it. sees better-than-expected market gains and a revival in macro-consumer demand.
Technical View
Om Mehra, Technical Analyst, SAMCO Securities
The stock is currently forming higher highs and higher lows indicating an ongoing uptrend. It is trading above its key moving averages. It is placed well above its short (20 Days) and medium term (50 Days) moving averages suggesting that bulls are in total control. Projections suggest a possible climb to 175 levels in the coming months if it sustains above the support level of 150. Any possible dip to the level of 150-155 can be used as a buying opportunity. Volume profiles also indicate a strong support base in this zone.
Rohan Shah – Technical Analyst, Religare Broking Ltd
Zomato has been steadily higher for the past five-plus months, after registering a decisive break of the bullish price pattern with notable volumes. However, from the last few sessions, the stock is seen finding stiff resistance around its record high levels ie 170 mark. We believe that for Zomato to continue its upward momentum, it would be crucial for the stock to decisively break the record high levels, which if it does, will pave the way for 185 and 200 levels. On the other hand, if the stock fails to break the record high levels, the stock will face profit-taking, dragging prices lower to 149-145 zones.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart
The stock forms a pattern of higher highs and higher lows on a daily basis, which suggests a promising trend. Additionally, the counter is now trading near its all-time high of 169, which is likely to act as a resistance level. Currently, it is trading at 161. If the trend continues, the initial target will be 170. If it manages to sustain its price above 170, we can expect targets of 200 in the short term. On the downside, the first support level is around 155. Further down, a crucial support level is at 149, where the 20-day moving average is positioned.
Sheersham Gupta, Director and Chief Technical Analyst at Rupeezy
Over the past 10 months, Zomato has taken support at its 20-EMA, and during the same period, its daily RSI has rarely fallen below 50. This presents the extreme bullishness in the stock. Currently, the stock is consolidating near its all-time high. The stock has closed in the green for eleven straight months and is overbought on weekly and monthly time frames. This may lead to a consolidation above 150. However, once the all-time high level is broken, a quick move can be expected and the stock may march towards 200-220 levels.
Fundamental View
Jefferies: The brokerage maintained a buy advisory on Zomato and raised its target price from ₹190 to ₹205. The new target price implies an improvement of more than 28 percent.
Zomato turned PAT positive in QFY24, much earlier than guidance. Improving profitability across both food delivery and quick business should continue to drive sharp earnings growth. It believes that growth here could be better, but the result is understandable in the context of weakness across consumer categories. The brokerage raised adjusted EBITDA estimates by 4-10 percent. In its base case, Jefferies expects a 25 percent CAGR in delivery revenue over FY23-26E. It expects unit economies of scale to steadily improve as Zomato unlocks cost efficiencies and as customer willingness to pay for convenience increases.
CLSA: The brokerage also has a ‘buy’ call on Zomato and raised its target price from ₹181 to ₹227. The new target indicates a 42 percent increase.
CLSA said that although the company is small, it is an increasingly indispensable part of the profit group. CLSA believes that the recent Q3 results point the way to stable profitability. The brokerage firm expects a 45 percent increase in the share price, even if the base case for food delivery does not play out.
“Even in a slower growth scenario for food delivery, with no Zomato daily launch, we see FY26 EPS of ₹5.36, 9 percent lower than our base case, but still 45 percent above our PE-based valuation. We are moving our blended valuation to DCF and FY26-based PE to align with our consumer/QSR methodology as we believe that food delivery and quick business is now on a stable profitable path,” CLSA said.
Geoit Financial Services: Geojit also reiterated a “buy” rating on the stock following the company’s December quarter earnings, with a rolled-up target price of ₹174, based on 7 times FY26E price/sales. The target implies a 9 percent increase.
“Despite muted consumer discretionary demand in Q3FY24, the food delivery business recorded solid growth. Despite muted consumer demand, the food delivery business recorded healthy growth. Strong growth momentum in the segments, positive margin and leading market position are expected. sustain superior performance, ” said Geojit.
Disclaimer: The above views and recommendations are those of individual analysts, experts and trading companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 28 Feb 2024, 13:49 IST