Zomato Shares Hit 52-Week High After Posting First-Ever Quarterly Profit

Zomato shares surged to hit a 52-week high of Rs 98.40, a jump of 12 per cent from Thursday's closing price of 86.22, in the morning trade on the NSE
Zomato Co-founder Deepinder Goyal
Zomato Co-founder Deepinder Goyal

Shares of Zomato Ltd rallied around 12 per cent in early trade on Friday after the company reported its first-ever quarterly profit. The stock opened at Rs 89 against Thursday’s closing price of Rs 86.22. The Zomato share price gained further to hit a 52-week high of Rs 98.40, a jump of 12 per cent, in the morning trade on the NSE.

At 11:25 am, Zomato shares were trading at Rs 97.15, up 10.55 points or 12.19 per cent.

The online food delivery company announced its first quarter earnings for fiscal year 2023–24 on Thursday. The company posted a net profit of Rs 2 crore against a loss of Rs 186 crore in the year-ago period. The consolidated revenue from operations jumped 70.9 per cent to Rs 2,416 crore from Rs 1,414 crore in the corresponding quarter of the last financial year.

In July 2021, Zomato shares were listed on the stock exchanges at Rs 115 per share against the issue price of Rs 76.

Total expenses increased to Rs 2,612 crore as compared to Rs 1,768 crore in the year-ago period.

"Zomato has delivered profitability earlier than promised. There is clarity on vastly improving revenue growth. This company in a duopoly business has a long runway for growth. For those investors who bought at low rates, partial profit booking is fine. It makes sense to remain invested in this growth stock," said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

In its results update, Motilal Oswal Financial Services (MOFSL) said the management has guided for strong 40 per to 60 per cent plus growth for Zomato (consol)/Blinkit over the next few years, which surprises us on the upside.

According to the brokerage firm, it expects the strong all-round performance from Zomato as an indicator of an accommodative competitive environment in both food delivery and quick commerce verticals. In addition, the sharp 80 basis point growth in take rate in food delivery highlights its success in cross-selling ads to restaurants, which is a more sustainable revenue stream rather than depending on an increase in take rate.

"We now estimate Zomato to turn positive on reported EBITDA by 4QFY24 and deliver a 5 per cent EBITDA margin in FY25, which should further drive profitability," Motilal Oswal said.

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