Zomato shares hit one-year high on surprise Q2 profit; stock settles 8% higher

Shares of online food aggregator Zomato Ltd rose sharply in the fag-end trading session on Friday to scale their one-year high level. The stock soared 11.63 per cent to hit a 52-week high of Rs 120 over its previous close of Rs 107.50. The scrip eventually settled 8.28 per cent higher at Rs 116.40. The counter has zoomed 93.20 per cent on a year-to-date (YTD) basis.

Zomato reported a surprise profit for the second-quarter of the ongoing financial year 2023-24 (Q2 FY24). The company posted a net profit of Rs 36 crore for the quarter ended September 30, 2023. It had reported a loss of Rs 251 crore a year ago.

The growth momentum we witnessed in Q1 FY24 continued in Q2 FY24 driven by healthy growth across all our businesses, said Zomato CEO Deepinder Goyal. Food delivery, quick commerce and going-out businesses grew 13 per cent QoQ/ 47 per cent YoY, he mentioned.

On the profitability front, we posted a second consecutive profitable quarter with adjusted EBITDA of Rs 41 crore as compared to Rs 12 crore profit in the previous quarter (Q1 FY24) and a loss of Rs 192 crore last year same quarter (Q2 FY23), Goyal stated.

Blinkit saw 29 per cent sequential GOV (Gross Order Value) growth, Zomato said. The growth was partly due to the low base effect, given the temporary disruption in the business in the previous quarter. On a YoY basis, the GOV growth was 86 per cent, as expected and in-line with the past, the company stated.

In Q2 FY24, Zomato added 28 new Blinkit stores, taking the total count to 411.

Zomato said its adjusted revenue to compound at a 40 per cent-plus growth rate over the next couple of years and that it remains on track to deliver on that outlook. 

"Our YoY adjusted revenue growth has been comfortably above 40 per cent, even in the past 8 quarters wherein the food business (excluding quick commerce) growth has been 30 per cent-plus," the firm further said.

Technical view on Zomato

"Zomato is bullish on daily charts and the stock may see targets of Rs 122-133 in the near term. Strong support will be at Rs 107.8," said AR Ramachandran from Tips2trades.

The counter traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150- and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 65.71. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 174.20 against a negative price-to-book (P/B) value of 4.45.

The scrip has an analyst target price of Rs 110, Trendlyne data showed, suggesting a potential downside of 5 per cent. It has a one-year beta of 1.76, indicating high volatility on the counter.

Also read: Adani Power shares up 25% in 7 sessions; what's next: Rs 360 or Rs 430?

Also read: Arvind Fashions shares rise on sale of beauty venture to Reliance Retail

Also read: Vodafone Idea shares up over 100% in six months; here's what tech analysts say