In today’s stock market update, Zomato’s shares continue their upward trajectory over the past year, marking a significant turnaround from their low point of ₹50 per share approximately one year ago. This surge has positioned Zomato as a favorable option for investors looking to buy during dips in the market. On March 26, Zomato’s share price reached an intraday high of ₹183.40 per share on the NSE, reflecting an impressive growth of over 250% in the past year alone. As trading progressed on Tuesday, Zomato’s shares reached yet another new high.
Analysts in the stock market anticipate robust quarterly results from Zomato in the coming month. They attribute this optimism to the resurgence of demand for online food services, which has now returned to pre-COVID levels. Additionally, with the commencement of IPL 2024, experts foresee a further boost in Zomato’s business as consumers are expected to turn to online food ordering to enhance their viewing experience during the matches.
Furthermore, the recent decision by Blinkit, Zomato’s quick commerce arm, to increase its charges by over 200% is seen as a strategic move that will bolster Zomato’s revenue stream, particularly in a market where it holds a dominant position. Analysts note that Zomato’s shares demonstrated a breakout at ₹175, and if it surpasses the current hurdle at ₹204 per share, they predict a potential upward movement to ₹247 per share.
With IPL 2024 taking center stage, the impact on Zomato’s online food delivery business has been significant. Avinash Gorakshkar, Head of Research at Profitmart Securities, emphasized the ripple effect of major sports tournaments on various industries. He highlighted IPL 2024’s role as a catalyst for Zomato, noting that the tournament’s allure prompts an uptick in online food orders as viewers seek uninterrupted enjoyment of matches. Given Zomato’s near-monopoly in the online food delivery sector, market analysts anticipate improved performance from the company in the upcoming month.
Gorakshkar further explained that Blinkit, Zomato’s quick commerce arm, has revised its charges substantially, increasing them from ₹11 to ₹35, representing a hike of over 200%. This move is expected to contribute positively to Zomato’s balance sheet, further reinforcing market expectations for enhanced financial performance.
Avinash Gorakshkar highlighted a notable trend reversal in the demand for online food delivery services, indicating a return to pre-COVID levels. This resurgence has triggered significant enthusiasm among investors, leading to heightened activity in Zomato shares. However, Gorakshkar cautioned that despite this positive sentiment, the core business of the company continues to incur losses. He emphasized that it is primarily the revenue from other sources that has allowed Zomato to mitigate these losses thus far. This insight underscores the need for investors to maintain a balanced perspective on Zomato’s financial performance and not solely rely on the surge in demand for its shares.
Shiju Koothupalakkal, Technical Analyst at Prabhudas Lilladher, anticipates further upward momentum in Zomato’s share price. According to Koothupalakkal, Zomato’s share price recently experienced a significant breakout on the chart pattern at ₹175 per share on a decisive basis. He notes that the stock has a robust support level at ₹154 per share.
For existing investors, Koothupalakkal advises maintaining a strict stop loss at ₹154 per share level. Currently, Zomato’s share price is encountering resistance at ₹204 per share. However, upon surpassing this hurdle, Koothupalakkal predicts that Zomato’s share price could ascend to the ₹247 per share mark in the medium term.
In terms of recommendations for new investors, Koothupalakkal suggests adopting a buy-on-dips strategy while adhering to a strict stop loss at ₹154. Fresh investors are encouraged to hold Zomato shares with a medium-term target of ₹247 per share.
Sources: livemint.com
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