Synopsis: Zomato's shares climbed 7% in early trading after its inclusion in the Sensex and shareholder approval for a Rs. 8,500 crore Qualified Institutional Placement (QIP). The stock, opening at Rs. 273, hit an intraday high of Rs. 282.85, reflecting strong investor sentiment. Zomato’s market cap rose to Rs. 2.47 lakh crore, supported by robust performance indicators and a bullish trajectory.
Zomato, India's leading online food delivery platform, saw a remarkable surge in its stock price today, following its inclusion in the Sensex and the green light for a significant fundraising initiative.
Performance Highlights:
Zomato has exhibited impressive growth metrics, trading above its short- and long-term moving averages, including the 5-day, 10-day, and 200-day averages.
The stock is trading close to its 52-week high of Rs. 298.20, reached in September 2024.
Over the past year, the company's shares have delivered a 147% return, and over two years, an extraordinary 338% growth.
With low volatility indicated by a beta of 0.7, Zomato remains a favourite among investors.
Sensex Inclusion and Fundraising:
Zomato is set to replace JSW Steel in the 30-stock Sensex index starting December 23, 2024.
This inclusion follows the approval of a Rs. 8,500 crore QIP, aimed at strengthening the company's balance sheet amid rising competition from peers like Swiggy and Zepto.
The funds will not be used for acquisitions but to prepare for future challenges in quick commerce and other verticals.
Quick Commerce Expansion:
The company’s Blinkit vertical has been a major contributor to growth, reporting a 129% increase in revenue year-on-year.
Blinkit has expanded aggressively, entering new cities and enhancing its average order value, which rose from Rs. 625 to Rs. 660 in the last quarter.
Brokerage Insights:
Morgan Stanley maintained an 'overweight' rating for Zomato, increasing its target price from Rs. 288 to Rs. 355 per share.
The firm highlighted Zomato’s sustained market share of 40% in the competitive food and quick-commerce sector, robust balance sheet, and projected profitability.
By 2030, Zomato could reach an annual profit pool of $1 billion.
Analysts forecast EBITDA breakeven within the next four quarters, supported by substantial margins by FY2027.
In conclusion, Zomato’s inclusion in the Sensex and its strategic fundraising initiatives signify its rising prominence in India’s digital economy.
With a strong performance in the quick-commerce sector, continued investor confidence, and sound financial strategies, Zomato is well-positioned to maintain its growth trajectory.
However, it faces challenges from competitors and market dynamics, underscoring the importance of execution and innovation.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are encouraged to consult professional advisors before making investment decisions.
