Zomato hits 52-week high; surpasses IPO price

Shares of Zomato rose as much as 2.8% to hit a 52-week high of ₹77.95 apiece on the BSE, thus surpassing its IPO (initial public offering) price of ₹76 as a series of positive factors led to heavy buying of the stock among investors. 

On Friday, the scrip opened a gap-up of ₹77.00, higher by 1.5%, as against the closing price of the previous session at ₹75.80. The counter closed at ₹77.57, higher by 2.34%. In the last two months, the stock has surged as much as 53%. During the session on Friday, the market capitalisation of Zomato stood at ₹66,548.75 crore as 50,80,108 shares exchanged hands on the BSE higher than the two-week average of 45.90 shares. At present, Zomato’s shares are trading 92.2% higher than the 52-week low of ₹40.55, which the company touched on July 7 last year. In the past month, three months and one year, the counter has given 27.32%, 43.57% and 12.95% in returns, respectively.

The company's better-than-expected March quarter results as well as the revision in discounts by ONDC (Open Network for Digital Commerce) have aided the investor sentiment.

Zomato's consolidated net loss for the March quarter for FY23 narrowed to ₹187.6 crore, 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.

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