Zomato hits new 52-week high; inches closer to ₹70,000 cr m-cap

Shares of Zomato continued to gain momentum at the beginning of the new trading session on Monday boosted by investor sentiments. The scrip opened a gap-up at ₹78.24 on Monday and soon surged as much as 3.5% to hit a new 52-week high of ₹80.30. The scrip closed at ₹77.57 on Friday. The company has surpassed its IPO (initial public offering) price of ₹76.

At present, the company's stock is trading 98.02% higher than the 52-week low of ₹40.55, which the company touched on July 27 last year. In the past three months, Zomato's stock has surged as much as 47.5%. During the session on Monday, the company's market capitalisation stood at ₹67,094 crore, moderately shy from hitting the important ₹70,000 crore mark. As many as 34,44,745 shares were exchanging hands on the BSE as against the two-week average of 46.72 lakh shares. In the past one month, three months and one year, this new-age tech stock has given 26.6%, 47.17% and 14.86%, in returns respectively.  

Zomato was listed on July 23, 2021, on Indian bourses. The company's stock lost more than 75% in value soon after listing owing to dwindling macroeconomic uncertainties and lower profitability. However, a series of events such as better-than-expected March quarter results and the revision in discounts by ONDC (Open Network for Digital Commerce) have wooed investors to continue buying this new-age stock in the past one month.

The company managed to trim its losses to ₹187.6 crore in the March quarter of FY23, thus registering a decline of 48% year-on-year (YoY), as against ₹359.7 crore in the same period last year. The company's revenue from operations during the quarter under review surged by 70% to ₹2,056 crore as against ₹1,211.8 crore in the same period last year. Of this, the company’s food delivery business reported revenue of ₹1,530 crore during the quarter under review, whereas the revenue for its quick commerce business stood at ₹363 crore. The revenue for the company's business-to-business segment stood at ₹478 crore. The company's gross order value stood at ₹6,569 crore in the March quarter.

Christopher Wood, Global Head of Equity Strategy, Jefferies, has picked up Zomato in his India long-only portfolio, at a weightage of 4%. Most analysts have become upbeat on the stock with a ‘BUY’ rating. Analysts at ICICI Securities have revised the target price of Zomato’s stocks to ₹83 from ₹75 while maintaining a 'BUY' rating. “We note a sustained improvement in profitability of the food delivery business and meaningful reduction in losses in the hyperpure and quick commerce businesses. This in our view has significantly improved the visibility of profitability in the medium term. We have upgraded our Revenue, EBITDA and PAT estimates for FY25E by 21%,139% and 100%, respectively. We now think Zomato consolidated (including Blinkit) could turn profitable on an Adjusted EBITDA basis (₹179mn) as early as FY24E," the brokerage firm said in a note.

Nuvama Institutional Equities has set a target price at ₹94 with a 'BUY' rating. Motilal Oswal has set a target price of ₹80 for Zomato, with a 'BUY' rating and a 24% potential upside.

JM Financial and Emkay Financial have maintained a 'BUY' call with a revised target price of ₹105 and ₹90, respectively.

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