Zomato shares surpass IPO price, jump 28% in one month; should you buy?

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Zomato share price jumped more than 3% on Monday to soar to a 1-year high, exceeding its IPO price of Rs 76. Zomato shares hit an intraday high of Rs 80.30 on NSE today. In the last one month, Zomato shares have rallied around 28%

Zomato share price today

Zomato shares have bounced back 91% from their record low level of Rs 40.55, touched on July 27, 2022. The company has reversed most of its losses incurred post the listing. Know why Zomato shares are rising, and should you buy the stock?

Zomato shares surpass
IPO price

Last month, Zomato reported its quarterly results where it turned EBITDA positive. The company is now hoping to achieve net profit on a consolidated basis in the next four quarters. In Q4FY23, Zomato narrowed its losses to Rs 188.20 crore from Rs 359.70 crore a year ago

Narrowing losses

Zomato's revenue in Q4FY23 rose 69.66% to Rs 2,056 crore for the quarter compared with Rs 1,211.80 crore in the corresponding quarter last year. With the cash burn reducing every quarter due to improvement in financial performance, things are looking better than estimated for Zomato, as per experts

Zomato outlook positive

Another reason for the rally in Zomato is news reports stating there will be revision of discounts at the Open Network for Digital Commerce (ONDC). ONDC had reportedly revised its incentive scheme for network participants to reduce the dependency on discounts for adoption

No immediate threat
from ONDC

According to share market analysts, Technically, the structure of Zomato stock looks lucrative for long-term investors. The stock has been highly volatile and has traded with a 1-year beta of 1.45, according to Trendlyne.  Several top brokerages including Goldman Sachs and Emkay Global has a 'buy' rating on the stock with a target price of up to Rs 94

Should you buy
Zomato shares?

Nuvama Institutional Equities has a target of Rs 94 on Zomato stock. Meanwhile, Motilal Oswal sees the stock at Rs 80. It said Zomato’s food delivery performance has been underwhelming in recent quarters, but the company has delivered a strong turnaround in profitability over the period

Zomato share price target

Morgan Stanley has an 'Overweight' rating on Zomato shares with a target price of Rs 85, and CLSA has a 'buy' call on the counter with a target price of Rs 80. Citi, Jefferies, and Goldman Sachs also have a 'buy' call on Zomato shares with a target price of up to Rs 84 per share

Brokerages on
Zomato shares

BofA has an 'Upgrade' rating on Zomato with a price target of Rs 85. The brokerage highlighted improving visibility of net income profitability, going ahead. It said that Zomato implemented strong execution on cost control. Sustained cost control and revenue recovery set the path for re-rating

Improvement in
profitability ahead

Christopher Wood, the stock guru and the Global Head of Equity Strategy of Jefferies has added Zomato to his India long-only portfolio, with a 4% weightage. Zomato has also been added to the global long-only equity portfolio in the May edition of Wood's 'Greed & Fear’ index

Chris Wood adds Zomato
to his portfolio

Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position

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