Zomato shares up 60% year-to-date; should you enter at current levels?

Shares of online food aggregator Zomato Ltd were trading around their all-time levels in Monday's trade. The stock today jumped 2.86 per cent to hit a high of Rs 199.65. It was last seen trading 2.45 per cent higher at Rs 198.85. At this price, the stock was down 4.08 per cent from its record high of Rs 207.30, a level seen last month on May 13. With that being said, the counter has gained 59.72 per cent in 2024 so far.

On BSE, around 26.51 shares changed hands today at the time of writing this story. The figure was lower than the two-week average volume of 39.69 lakh shares. Turnover on the counter stood at Rs 52.16 crore, commanding a market capitalisation (m-cap) of Rs 1,75,657.01 crore.

A few technical analysts largely remained positive on the counter. Major support could be seen at Rs 175 level. And, a decisive move above Rs 205 is required for further upside, one of the analysts suggested.

"One can buy Zomato shares for upside targets of Rs 225-230. Keep stop loss placed at Rs 175," Rudra Murthy BV, MD at Vachana Investments, told Business Today TV.

"The stock has been in a secular uptrend, hovering near its lifetime highs. The counter has gained traction after some consolidation seen in last couple of trading weeks. A series of support could be seen at the Rs 185-180 zone, followed by sacrosanct support at Rs 175. On the higher end, Rs 200-205 remains a daunting task, and a decisive move beyond the said range could trigger the next leg of rally," said Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One.

The scrip has potential to hit an upside target of Rs 210 in the near term, said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking. Keep stop loss placed at Rs 190, Singh added.

Zomato has recently issued a clarification over a report related to the acquisition of Paytm's movies and events business. "We acknowledge that we are in discussions with Paytm for the aforementioned transaction, however, no binding decision has been taken at this stage that would warrant a Board approval and subsequent disclosure in accordance with applicable law," Zomato stated in an exchange filing.

During the fourth quarter (Q4 FY24), the food delivery platform reported a consolidated net profit of Rs 175 crore as against a loss of Rs 189 crore in the year-ago period.

In Q4 FY24, Zomato's revenue from operations came at Rs 3,562 crore compared to Rs 2,056 crore in the corresponding period last year. The company also mentioned that its Blinkit (quick commerce) business turned adjusted EBITDA positive in March 2024.

Zomato's total expenses jumped nearly 50 per cent due to a surge in marketing and sales promotion costs.

However, the firm's contribution margin -- a key profit metric -- expanded to 7.5 per cent from 5.8 per cent a year ago as the company started charging a platform fee on all grocery and food orders.