Zomato Ltd witnessed a remarkable uptick in its shares, soaring by 6.19% to reach a new one-year high at Rs 158.70 in Monday’s trade. This multibagger stock has exhibited an impressive rally of over 200% in the past year, fueled by the company’s robust performance in the third quarter.
In the Q3 FY24 report, Zomato reported a consolidated net profit of Rs 138 crore, marking a significant turnaround from a net loss of Rs 347 crore in the year-ago fiscal. The expansion of the contribution margin to 7.1% in Q3 FY24, up from 6.6% in Q2 FY24, played a pivotal role in this positive financial outcome. The introduction of a fee for customers to use the food delivery platform contributed to the enhanced profit metric.
Zomato’s diversified portfolio showcased impressive results, with the gross order value (GOV) at Blinkit, its grocery delivery business, more than doubling. Additionally, the mainstay food delivery business experienced a growth of 27%, leading to a substantial 69% jump in total revenue, reaching Rs 3,288 crore.
However, Zomato acknowledged that the growth in its food delivery segment fell below expectations due to “muted demand.” The company anticipates a GOV increase of more than 20% in the coming quarters.
From a technical perspective, Zomato’s stock traded above various simple moving averages (SMAs) and recorded a 14-day relative strength index (RSI) of 74.72, indicating an overbought condition. Analysts are cautious about potential resistance near the previous peak zone of Rs 169, emphasizing major support at Rs 133 and near-term support around Rs 146.
Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher, highlighted the bullish trend but advised investors to watch for a daily close below Rs 140, as it could lead to a decline to Rs 128 in the near term, according to AR Ramachandran from Tips2trades.
With a price-to-equity (P/E) ratio of 112.55 and a price-to-book (P/B) value of 6.02, Zomato’s stock continues to attract attention in the market. Investors are urged to stay informed and consider potential risks before making any investment decisions.