Zomato shares halt 8-day winning run, slip 5% today; here's what brokerages say

Shares of online food aggregator Zomato Ltd fell sharply in Wednesday's trade, pausing their eight-day upward trend. The stock slipped 5.47 per cent to hit a day low of Rs 74 over its previous close of Rs 78.28. Before this, the scrip scaled to its 52-week high of Rs 80.30 a couple of sessions back. Today's weakness in the share price came after the company announced that it has deregistered Zomato Australia from itself.

"We wish to submit that Zomato Australia Pty Ltd, a step-down subsidiary of the company, located in Australia has been deregistered effective from June 11, 2023," Zomato stated in an exchange filing.

Prior to this, Zomato Hyperpure Pvt Ltd (ZHPL), a material subsidiary of the company, approved the appointment of SR Batliboi & Associates LLP as statutory auditors of ZHPL.

On the earnings front, Zomato narrowed its losses to Rs 188.20 crore during the March 2023 quarter compared with Rs 346.60 crore in the December 2022 quarter and Rs 359.70 crore in the same quarter last year. Revenue for the quarter (Q4 FY23) rose 69.66 per cent to Rs 2,056 crore for the quarter compared with Rs 1,211.80 crore in the corresponding quarter last year.

At least five brokerages have given 'Buy' calls, suggesting a target price of up to Rs 105.

"On the weekly chart, Zomato has formed a 'double bottom' pattern and successfully broken above its neckline at the Rs 75 level. This breakout indicates a positive trend in the stock price, presenting an opportunity for potential upward movement. The stock is well placed above 20-, 50- and 100-daily SMA indicating positive momentum. The weekly strength indicator RSI is holding above its reference line indicates positive momentum. The above analysis indicates an upside of Rs 83-90 levels," Axis Securities said.

Kotak Institutional Equities revised its target price to Rs 95. Similarly, Nuvama Institutional Equities has revised the target price to Rs 94.

"We expect Zomato to maintain its market leadership in the food delivery segment. Zomato's relaunch of its Gold membership plan should bring back growth. Meanwhile, improved profitability is a clear demonstration of operating efficiencies playing out. Our note reflects our positive stance backed by improved profitability," said Nuvama.

JM Financial has suggested a target price of Rs 105, while Emkay Financial has given a target of Rs 90.

The stock was last seen trading higher than the 20-day, 50-, 100- and 200-day moving averages but lower than the 5-day moving averages. The counter's 14-day relative strength index (RSI) came at 66.17. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 572.77. It has a price-to-book (P/B) value of 3.22.

That said, the scrip has an average target price of Rs 74.33, Trendlyne data showed, suggesting a potential downside of 0.69 per cent. It has a one-year beta of 1.47, indicating high volatility on the counter.

Meanwhile, Indian equity benchmarks traded higher in late deals today, led by gains in consumer, energy and metal stocks.

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