Zomato Share Price Surges 8%, Breaches Rs 100 Milestone, Reaches 52-Week High
Zomato Share Price
Zomato’s Impressive Rally: Profits, Growth, and Investor Optimism Push Shares Beyond Rs 100 Mark
Shares of Zomato, a prominent player in the food delivery industry, experienced a significant surge, rallying by 8% and crossing the coveted Rs 100 mark during Monday’s trading session on the Bombay Stock Exchange (BSE).
Adding to the excitement, the company’s stock reached a new 52-week high, achieving a remarkable milestone at Rs 102.8.
This upswing in Zomato’s stock price can be largely attributed to the company’s notable achievement of turning profitable in the first quarter of the financial year 2023 (Q1 FY24).
Zomato’s financial performance during Q1 FY24 marked a remarkable turnaround from its previous struggles.
The company reported a consolidated net profit of Rs 2 crore for the quarter ending in June 2023, a stark contrast to the substantial loss of Rs 186 crore incurred during the same period in the preceding fiscal year.
This shift towards profitability was underscored by Zomato’s earlier loss of Rs 189 crore in the immediate preceding quarter, which concluded in March.
However, the real testament to Zomato’s resurgence lay in its revenue growth. The company’s revenue from operations for the reported quarter soared to Rs 2,416 crore, showcasing an impressive year-over-year surge of nearly 71% compared to the Rs 1,414 crore reported during the corresponding period in the prior year.
This remarkable growth in revenue not only signified Zomato’s ability to adapt and thrive in the challenging market conditions but also served as a testament to the company’s effective business strategies.
Gaurav Bissa, Vice President at InCred Equities, provided valuable insights into the dynamics of Zomato’s stock performance.
Bissa noted that the stock initiated a compelling buy signal within the Ichimoku setup when it was trading around the 58 levels. An intriguing trend emerged as Zomato’s stock consistently formed higher highs and higher lows on the daily charts since the beginning of the year 2023. This pattern suggested a promising short-term trend reversal, further boosting investor confidence.
Taking a more technical view, Pravesh Gour, Senior Technical Analyst at Swastika Investmart, shed light on Zomato’s stock behavior.
Gour emphasized that the stock appeared to be reaching a bottoming phase, an encouraging indication for investors. Even more noteworthy was the stock’s breakout from an inverse head and shoulders formation pattern on the weekly chart.
This breakout, combined with the stock’s trading position above critical moving averages, provided a positive outlook. Gour also pointed out the supportive role of technical indicators, such as the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI), in validating the stock’s current strength and potential for future growth.
From a technical analysis standpoint, Gour outlined key levels to watch. He identified Rs 100 as a psychological resistance level, suggesting that surpassing this barrier could trigger a rally towards Rs 114.
On the flip side, he highlighted Rs 87 as an important support level that could provide stability in the event of any corrective movement.
Deepinder Goyal, the Managing Director and CEO of Zomato, shared his perspective on the company’s Q1 earnings and the strategies that drove its success.
Goyal highlighted the company’s concerted efforts to streamline its operations, optimize business complexity, and strategically place the right individuals in key roles.
While acknowledging that the impacts of such strategic decisions might not be immediately measurable, Goyal emphasized that many of the company’s seemingly bold bets had indeed altered the trajectory of the business in a significantly positive way, often exceeding initial expectations.
Addressing concerns about the sustainability of profitability, Akshant Goyal, the Chief Financial Officer of Zomato, expressed a high level of confidence in the company’s future financial performance.
He indicated that, based on the current understanding, Zomato was well-positioned to maintain its profitability going forward. Moreover, Goyal projected a promising growth trajectory, anticipating a year-over-year topline (Adjusted Revenue) growth of over 40% for at least the next couple of years.
In conclusion, Zomato’s recent stock rally and achievements underscore the company’s ability to adapt, innovate, and capitalize on market opportunities.
The transition to profitability in Q1 FY24, coupled with robust revenue growth, has not only attracted investor optimism but has also positioned Zomato as a key player in the competitive food delivery industry.
The analyses and projections from experts like Gaurav Bissa and Pravesh Gour further support the notion of a positive trend reversal and sustained growth potential.
With the company’s leadership, as represented by Deepinder Goyal and Akshant Goyal, expressing confidence in Zomato’s strategic direction and future prospects, the stage is set for Zomato to continue its journey of success and value creation for both shareholders and customers alike.
