Shares of online food aggregator Zomato settled 0.47 per cent higher at Rs 53.96 on Monday. The stock has, however, declined 10.44 per cent on a year-to-date (YTD) basis. At Monday’s closing level, the scrip traded 33.07 per cent higher than its 52-week high of Rs 40.55, hit on July 27 last year. Yet, the counter has lost 38.95 per cent from its one-year high level of Rs 88.40, touched on March 31, 2022.
Zomato’s net loss widened to Rs 346.60 crore year-on-year (YoY) for the quarter that ended December (Q3 FY23) against a loss of Rs 63 crore in the year-ago period. The firm had reported a net loss of Rs 250.80 crore in the previous September quarter. However, Zomato’s revenue from operations rose 75.20 per cent to Rs 1,948 crore in Q3 FY23.
The online food aggregator is apparently in a process of streamlining operations to attain long-term profitability. It recently withdrew from 225 smaller cities, citing poor performance. These cities, Zomato said, contributed only 0.30 per cent to the company’s gross order value (GOV) in Q3 FY23.
“Having a profitability mindset is the key. As a company, we have been constantly re-evaluating and optimising investments, including taking a hard look at resource allocation across functions, shutting down non-performing markets, and reassessing our headcount, among others,” Zomato CEO Deepinder Goyal had written in a letter to shareholders.
For Zomato, Kotak Institutional Equities has given a ‘Buy’ call while pegging it at a fair value of Rs 82.
Ravi Singhal, CEO of GCL Securities, said, “Zomato looks good at the current valuation for a target of Rs 99 till Diwali this year. The company is slowly becoming a leader in the segment and bigger than its competition. Also, it is expected to turn cash positive in the coming quarter.”
AR Ramachandran from Tips2trades said that support on the counter could be seen at Rs 51.50 level.
The stock traded higher than the 20-day and 50-day moving averages but lower than the 5-day, 100-day and 200-day moving averages. The counter’s 14-day relative strength index (RSI) came at 52.52. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a negative price-to-equity (P/E) ratio of 128.72.
Zomato has an average target price of Rs 62.50, Trendlyne data showed, suggesting a potential upside of 15.85 per cent. The scrip has a one-year beta of 1.49, indicating high volatility on the counter.
Meanwhile, Indian equity benchmarks were closed today due to ‘Holi’.
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