Zomato shares jump 4% to hit 52-week high; stock can rally further, say analysts

Shares of Zomato Ltd extended their gains for the third straight session in Thursday's trade. The stock surged 3.80 per cent to hit a fresh 52-week high of Rs 113.25 against its previous close of Rs 109.10. At today's high price of Rs 113.25, the multibagger scrip has zoomed 155.36 per cent from its one-year low price of Rs 44.35, a level seen on January 25, 2023.

For Zomato, analysts at ICICI Securities have given a target price of Rs 160. "Given the outlook of sharp profitability improvement in all businesses, we believe valuations for the stock are now pretty sensible. We therefore think there is enough room for meaningful rerating of the stock," the brokerage stated.

The brokerage has priced in revenue growth of 25 per cent in FY24, 26 per cent in FY25 and 20 per cent in FY26 for the food delivery business. Overall, ICICI Securities suggested that Zomato may see revenue growth of 43 per cent in FY24, 34 per cent in FY25 and 25 per cent in FY26.

Kotak Institutional Equities has also stayed 'positive' on Zomato and pegged the stock at a fair value of Rs 125. Zomato's profitability metrics should witness continuous improvement over the next 2-3 quarters, led by operating leverage-driven margin improvement in the food delivery business and curtailment of losses in the Hyperpure and Blinkit businesses, it said.

Technical analysts largely remained 'bullish' on the counter. Support level could be seen at Rs 106.55.

DRS Finvest founder Ravi Singh said, "Zomato share price has entered into the bull run after breaking the strong resistance of Rs 80-100 levels. It may see further up move and touch Rs 120 level in coming trading sessions. The Q2 FY24 numbers may decide the future price momentum."

AR Ramachandran from Tips2trades said, "Zomato is bullish on the daily charts and a close above resistance of Rs 109.5 could lead to target of Rs 118 in the near term. Strong support will be at Rs 106.55."

Zomato has recently liquidated its wholly-owned subsidiary Zomato Chile SpA. "As disclosed in our red herring prospectus dated July 6, 2021, and prospectus dated July 19, 2021, ZM Chile did not have any active business operations and was under the process of liquidation. It may be further noted that the closure of ZM Chile does not affect the turnover/revenue of the company," the online food aggregator mentioned.

Prior to this, Zomato's step-down subsidiary, Zomato Slovakia, was liquidated.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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