Zomato share price at a fresh record high, up nearly 193% from its 1-year low; is it still buy-worthy? Experts weigh in | Stock Market News

Zomato share price: Rising over 5 per cent in intraday trade, shares of Zomato hit its fresh all-time high of ₹285.95 in intraday trade on the BSE on Thursday, September 12. The stock finally closed 4.49 per cent higher at ₹283.90, extending its winning streak into the sixth consecutive session.

The stock hit its 52-week low of ₹97.07 on September 13 last year. At the current market price of ₹283.90, it has jumped nearly 193 per cent from its one-year low.

Zomato’s stock made its debut on the Indian bourses on July 23, 2021, and in just over three years, it has delivered a remarkable 274 per cent return, surging from its issue price of ₹76.

On a monthly basis, the stock has stayed in the green since April 2023, with May being the only month that broke its winning streak this year. After a brief pause in May, the stock resumed its upward march in June and has been climbing ever since. In the current month so far, the stock has surged 13 per cent.

Given the stock’s impressive rally over the past year, we reached out to several analysts to gather their insights on what’s fueling its momentum and what investors should do with the stock. Here’s what they said:

Fundamental views

Rajesh Sinha, Senior Research Analyst at Bonanza

The stock price of Zomato has rallied, mainly due to positive investor sentiments created after seeing a flurry of upgrades in target price by global brokerage firms like JPMorgan, CLSA, and Jefferies as analysts turn positive on its quick commerce business Blinkit.

The rally in Zomato’s stock price, also boosted by its recent acquisition of Paytm’s events and movie ticketing business, which will add a new revenue stream, has led to positive reactions from investors. Zomato’s management is also optimistic about future growth, especially in the going-out segment, which is expected to draw strong demand.

“With more than half of the tech-based Indian food delivery market under its grip, Zomato has cemented its position as a major player in the sector. Its broad range of offerings, which includes grocery delivery, dine-out alternatives, food delivery, and the Hyperpure business, further contribute to its domination,” said Sinha.

Sonam Srivastava, Founder at Wright Research

Zomato’s overall strategy strongly focuses on profitability and scaling across multiple verticals. The food delivery segment remains the core of its business, where Zomato has achieved steady growth, reaching 13 per cent GMV growth in dollar terms by the end of FY24.

The company’s margin improvements are notable, with its EBITDA margin projected to expand from 0.3 per cent in FY24 to 15.1 per cent by FY27, reflecting operational efficiencies and higher average order values.

In parallel, Zomato’s quick commerce (Blinkit) has shown impressive traction, capitalizing on a growing consumer shift towards fast deliveries.

Blinkit’s expanding dark store network, now at 433 locations, enhances Zomato’s reach, while its SKU expansion drives basket size growth. These efforts point to a diversified strategy where Zomato is not just about food delivery but also quick commerce and now the entertainment space.

Zomato’s increasing cash reserves, projected at ₹21,300 crore by FY27, give it the flexibility to pursue growth and new business lines, providing a strong foundation for its future ambitions.

Technical views

Hardik Matalia, Derivative Analyst, Choice Broking

Matalia pointed out that Zomato stock has exhibited a strong uptrend, consistently forming higher highs and higher lows. This indicates robust bullish momentum and suggests the potential for continued upward movement. Support could be at ₹265, with a short-term price target near ₹325.

The Relative Strength Index (RSI) is at 67.54 and trending upward, reflecting increasing buying momentum. This upward trend in the RSI signals that the stock is gaining strength, reinforcing the bullish outlook. Additionally, the stock is trading above its short-term (20-day), medium-term (50-day), and long-term (200-day) Exponential Moving Averages (EMAs), further confirming the prevailing bullish sentiment.

“Given these positive technical indicators and the current market environment, Zomato presents a promising buying opportunity for investors targeting ₹325. To manage risk, stop loss at ₹250 is recommended to protect against unexpected market downturns, ensuring that the losses can minimised,” said Matalia.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers

Zomato is currently experiencing a clear uptrend, as evidenced by its consistent formation of a “higher highs” structure on the price chart. This means that each new peak in price is higher than the previous one, indicating sustained upward momentum.

On the technical indicator front, both the Directional Movement Index (DMI) and the Relative Strength Index (RSI) are suggesting bullish momentum.

“If Zomato’s stock price successfully breaks through the ₹282 resistance, it opens the door for a potential move towards ₹300, a psychologically significant and technical level. On the downside, if there’s any retracement or pullback, the support zone around ₹265 is expected to act as a buffer, limiting the extent of the decline. This area should provide a strong base for the stock, keeping the uptrend intact unless broken decisively,” said Patel.

Read all market-related news here

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.