Why Zomato stock rose 18% today despite Rs 360-crore loss in Q4

Shares of Zomato rose over 18 per cent in early trade despite the food delivery giant reporting widening of its consolidated net loss in the last quarter. The large cap stock gained 18.6 percent to Rs 67.6 on positive growth outlook for Q1 of this fiscal. The stock closed at Rs 57 on Monday.

Zomato stock is trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The share has lost 55.73 per cent in 2022 and fallen 25.02 per cent in a month.

Market cap of Zomato stood at Rs 51,218 crore on BSE. Total 49.21 lakh shares of the firm changed hands amounting to a turnover of Rs 31.35 crore. The stock hit a 52-week high of Rs 169.10 on November 16, 2021 and a 52-week low of Rs 50.35 on May 11, 2022.

Zomato Q4 results: Net loss widens to Rs 360 cr, revenue surges 75%

The firm reported a loss of Rs 360 crore in the fourth quarter ended March 31, 2022 against net loss of Rs 134 crore in the year-ago period. Zomato's consolidated revenue from operations rose 75 per cent to Rs 1,212 crore as against Rs 692 crore in the same quarter last fiscal.

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UBS has given a buy call on the Zomato stock with a target price of Rs 130. The financial services firm said Q4 was a healthy one despite reopening headwinds. The firm's disclosures have also improved this quarter, which is a positive.  It believes growth drivers will continue to remain strong for the company.

Prashanth Tapse, Vice President (Research), Mehta Equities said, "As expected, Zomato reported a jump in topline but widened net loss as compared to the year-ago period ahead of surge in expenses to sustain the competition with discounts. Zomato reported an EBITDA loss of Rs 449 crore in Q4FY22 against a loss of Rs 153.5 crore. On the positive trend, average monthly transacting customers rose to an all-time high of 15.7 mn from 15.3 mn in the third quarter Post results, management gave optimistic comments for the upcoming quarters as it is aiming for accelerated growth along with reduction in losses which is giving support to stock today. I believe at this juncture, accumulated losses would remain a high concern and it only requires more capital to keep the business going. Technically, today's gap-up opening has to be sustained and if it holds good, upside can be limited to Rs 72-75 while a conservative trader should use this jump to book profits."

On the other hand, Morgan Stanley is overweight on the stock with a target price of Rs 135. It said Q4 numbers were in line, with improved transparency on segment disclosures.

The firm gave a better outlook for Q1 of this fiscal and plans a tighter framework around capital allocation. With these results, the company is moving in the right direction although it needs consistent execution, said the financial services firm.