
Shares of online food delivery provider Zomato Ltd are trading at over 18 month high powered by the company’s Q1 earnings. The stock, which closed at Rs 100.50 on January 25, 2022, managed to reclaim the Rs 100 mark after a gap of over 18 months in today’s session. The stock zoomed 7.77% to a 52-week high of Rs 102.85 in today’s session against the previous close of Rs 95.43 on BSE. On Friday, the stock climbed 14% intraday to Rs 98.39 post Q1 earnings.
In the current session, the Zomato stock opened higher at Rs 97 on BSE. In a year, the stock has risen 83.49% and climbed 66% in 2023. The stock hit a 52-week low of Rs 44.35 on January 25, 2023.
Total 135.54 lakh shares of Zomato changed hands amounting to a turnover of Rs 135.82 crore on BSE. The market cap of the firm rose to Rs 85,800 crore on BSE.
ALSO READ: Rs 50 to Rs 235: This Tata group stock turned into a multibagger in three years; buy, sell or hold?
In terms of technicals, the relative strength index (RSI) of Zomato stock stands at 79.2, signaling it's trading in the overbought zone. Zomato stock has a one-year beta of 1.5, indicating high volatility during the period. Zomato stock is trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
The rally in the stock came after Zomato reported a net profit for the first time. The food delivery platform logged a profit after tax (PAT) of Rs 2 crore in the June 2023 quarter against a net loss of Rs 189 crore and Rs 186 crore in the March 2023 quarter and June 2022 quarter, respectively.
ALSO READ: IRFC shares rise 44% in a month, approach record high; can the rally continue?
The consolidated adjusted EBITDA of the company rose to Rs 12 crore for the April-June quarter. However, it posted a EBITDA loss of 152 crore in the year ago quarter. Analysts were expecting Zomato to report an EBITDA loss of up to Rs 200 crore in this quarter.
A majority of analysts are now upbeat on the prospects of the Zomato stock.
Aditya Gaggar from Progressive Shares said, “After a stellar listing, Zomato Ltd made a high of Rs 169 followed by a nose-dive correction to Rs 40. Recently, it has given a breakout from the Rounding Bottom Formation with volumes that indicate a strong comeback of the bulls. In the shorter time frame, the stock seems to be overbought. So any decline toward Rs 90 will be a good opportunity to enter into it with the target price of Rs 118. Looking at the trend-following indicators such as MACD or ADX, both of them are indicating the presence of a strong trend.”
Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd said, “The counter is bottoming out and has also witnessed a breakout of an inverse head and shoulders formation pattern on the weekly chart. It has confirmed its breakout above Rs 90. The overall structure also looks lucrative for long-term investors as it trades above all-important moving averages. MACD (moving average convergence divergence) is supporting the current strength, whereas the momentum indicator RSI (relative strength index) is also positively poised. On the upside, Rs 100 is the psychological resistance level; above this, we can expect a rally towards Rs. 114. On the downside, Rs. 87 is an important support level during any correction.”
Kush Ghodasara, Independent Market Expert (CMT) said, “Zomato has recently achieved profitability, which is a positive sign. Their focus on improving margins and implementing a B2B module bodes well for their future prospects. With a near duopoly in the market, holding the highest market share, Zomato is in a favorable position. The expansion into Tier 2 cities and continuous addition of new cities further contributes to their promising outlook. Additionally, their instant grocery app, BLINKIT, is gaining popularity, leading to reduced losses. This success in the grocery delivery segment could potentially drive significant profit growth in the upcoming months. From a technical perspective, Zomato's breakthrough above the resistance level of Rs 85 on the weekly chart after a year is noteworthy, especially with strong trading volumes supporting the rally. The bullish crossover of technical indicators indicates a positive trend. Investors may consider purchasing Zomato's stock at the current market price (CMP) with a target of Rs 165 and setting a stop loss at Rs 83."
Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One said,"Zomato has strongly recouped from the lows in the current financial year and since then has followed the cycle of higher highs -higher lows. Post the outcome of quarterly earnings, the counter has gained robust traction and soared over 20 percent in the past couple of trading sessions. At present, the stock is situated at a crucial resistance zone of 100 and a decisive breakthrough would only dictate the next leg of the rally towards the potential resistance of 120 odd zone from a short to medium-term perspective. However, post the recent stellar rally; one should not become complacent as the possibility of cool-off/ profit booking is higher. On the lower end, a series of support could be seen from Rs 90-80 zone in the comparable period. Hence, one needs to have a pragmatic approach and should keep a close tab on the mentioned levels."
Abhijeet from Tips2trades said, "Zomato stock price buoyed by its good Q1FY24 results has crossed Rs 100 but is also overbought on the daily charts with next resistance at Rs 106.15. Investors should be booking profits at current levels as a daily close below support of Rs 97 could lead to a fall till target of Rs 81.6 in the near term."
Also watch: Zomato share price crosses Rs 100 mark! Has the tide turned?
Also read: Hot stocks on August 7, 2023: Zomato, Paytm, IRFC, Adani Green, Grasim and more
Also read: Why are SBI shares falling post Q1 results. Should you buy, hold or sell this PSU bank stock?