Zomato shares halt five-day climb, slip 3% today; what's next: Rs 70 or Rs 90?

Shares of online food aggregator Zomato Ltd fell on Monday, snapping their five-day winning run. The stock settled 2.78 per cent lower at Rs 80.18 over its previous close of Rs 82.47. It scaled a 52-week high price of Rs 85.25 on Friday last week. At today's closing price, it has gained 33.08 per cent in 2023 so far and 49.59 per cent in past one year. The company's latest earnings and global business restructuring have boosted investor confidence, analysts said.

On technical setup, support on the counter could be seen around Rs 70-75 levels, while Zomato may find resistance in the Rs 85-90 zones. One of the analysts also suggested that the stock may cross Rs 100 mark by 2023-end.

Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, "The stock has given a price volume breakout above Rs 73-75 levels. The outlook on the stock continues to inspire confidence. As far as levels go, the stock is likely to find support in the Rs 73-70 zone in the short term and strong resistance in the Rs 85-90 zones."

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock has witnessed a decent spurt from the consolidation phase of Rs 75 zone to resists near the peak of Rs 85 level with some profit booking witnessed. It has a near-term support at around Rs 78. Only a decisive move below Rs 73.50 shall weaken the trend overall and can expect for a further slide."     

Ganesh Dongre, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "The stock has already seen a decent rally from Rs 50 to Rs 80 in a short period of three months. After consolidating in the price zone of Rs 70-78 levels, it has given a fresh breakout above Rs 78. So, traders can hold the stock for a target price of 94 in upcoming sessions with the stop loss placed at Rs 70."

Ravi Singh, Vice-President and Head of Research at Share India, said, "Zomato latest earnings growth has induced confidence among the investors and business prospects, which is also expected to improve further. The momentum indicators are suggesting an uptrend towards the levels of Rs 90 in the near term.

AR Ramachandran from Tips2trades said, "Zomato is bearish and also overbought on the daily charts with next resistance at Rs 85. A daily close below Rs 80.50 could lead to target of Rs 73 in the near term."

Milan Sharma, Founder and MD of 35North Ventures, said, "The business model remains intact and will only grow in the coming times. Operating margins have improved in the last quarter. But, from a long-term perspective, it is still to be seen whether the company will be able to sustain and also improve its operating margins further. At present, the price of Rs 82 should hold. But fresh buyers should wait for a dip and enter around Rs 75."

Vaibhav Kaushik, Research Analyst at GCL Broking, "Zomato is doing great for the last 6 months, especially after restructuring its global business. Now, all negatives are priced in. We have a target price of Rs 133 till the end of this year."

The counter's 14-day relative strength index (RSI) came at 64.31. 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 603.43 against a price-to-book (P/B) value of 3.39. The scrip has a one-year beta of 1.66, indicating high volatility.

Meanwhile, Indian equity benchmarks settled at fresh closing highs today. The 30-share BSE Sensex pack gained 529 points or 0.80 per cent to close at 66,589.93, while the broader NSE Nifty index surged 147 points or 0.75 per cent to end the session at 19,711.45.