Zomato shares rise 6% amid volatile market, here's why

Shares of Zomato rose 6 per cent in early trade amid a highly volatile market today after data showed the market value of the food delivery firm across asset management companies (AMCs) rose to Rs 1,343 crore in July 2022 against Rs 963 crore in June. Zomato stock opened higher at Rs 65.50 against the previous close of Rs 65.30 on BSE today. It touched an intraday high of Rs 69.20, gaining 5.97 per cent on BSE. However, Zomato shares have fallen 50.38 per cent in 2022 and lost 49.48 per cent in a year.

The stock hit a 52-week high of Rs 169.10 on November 16, 2021 and a 52-week low of Rs 40.55 on July 27, 2022.

Total 151.36 lakh shares of Zomato Ltd changed hands amounting to a turnover of Rs 101.57 crore on BSE. The market cap of the firm rose to Rs 54,095 crore on BSE.

At 11:15 am, Zomato share price traded 4.59 per cent higher at Rs 68.30.

ALSO READ: Zomato offers to help 7-year-old boy turned delivery executive after father's accident

Data also showed HDFC AMC's holding in Zomato stock rose by more than 707 per cent to 1.13 crore shares in the last month against 14 lakh shares in June. The market value of the mutual fund jumped to Rs 53 crore in Zomato against Rs 8 crore in June.

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Shares of Zomato have gained 41 per cent since August 1 when the firm announced its Q1 earnings. In the first quarter of the current fiscal, Zomato reported a net loss of Rs 186 crore against a net loss of Rs 356 crore year ago.

Zomato's revenue from operations, which mostly comes from its mainstay food delivery and related fees it charges restaurants for using its platform, zoomed 67 per cent to Rs 1,414 crore in the June quarter against Rs 844 crore a year ago.

JM Financial has given a buy call for the Zomato stock with a target price of Rs 115.

"We remain bullish on the company's long-term growth prospects in the hyper local delivery space as we believe it is well positioned to benefit from robust industry tailwinds such as improving tech penetration and rising income share of digitally native millennials / GenZ. We marginally raise our core business EBITDA margin estimates over FY23-25 basis incremental disclosures in Zomato's FY22 annual report, leading to upward adjustment to our EPS estimates. We retain our 15-Yr DCF-based target price for core business at Rs 115 while highlighting that Blinkit merger integration can add 8 per cent  value to our target price," said JM Financial.

ALSO READ: 7-year-old delivers food for Zomato after dad meets with accident

Meanwhile, Zomato-backed logistics technology platform Shiprocket has become India's 106th unicorn after raising $33.5 million (about Rs 270 crore) in a funding round co-led by Temasek and Lightrock India. The development also led to positive sentiments around the stock today.

The fresh funds will help Shiprocket extend its operating system by building newer software and intelligence products along with deepening its capability on the fulfilment and same-day delivery experience, it said.

Meanwhile, Sensex fell 275 pts to 59,984 and Nifty lost 76 pts to 17,867 in the afternoon trading session today.