Zomato Shares Soar After Stellar Q1 Results

In a remarkable turn of events, Zomato‘s share price jumped 19 percent in morning trade on August 2, hitting a new all-time high of ₹278.45. This surge came right after the company revealed its impressive quarterly results for the April-June 2024 period.

The stock opened at ₹244 and quickly drew attention as Zomato’s consolidated net profit for Q1FY25 skyrocketed to ₹253 crore, a huge leap from just ₹2 crore during the same quarter last year. This impressive performance was largely driven by a significant increase in gross order value across its food delivery and dining segments.

Consolidated revenue for this quarter stood at ₹4,442 crore, compared to ₹2,597 crore a year earlier, clearly showcasing the company’s growth. Despite the sharp rise in share price of about 170 percent over the past year, many brokerage firms are still recommending Zomato’s stock as a good buy, citing its solid growth and profitability prospects.

Following the strong Q1 results, several brokerage firms, including Nuvama Wealth and Motilal Oswal Financial Services, are raising their target prices for Zomato shares. Nuvama has upgraded its target to ₹285 from ₹245, highlighting Zomato’s consistent delivery of growth and profitability. They noted that Zomato’s management is aiming for over 20 percent growth in its food delivery business and plans to expand the number of Blinkit‘s dark stores significantly by 2026.

Kotak Institutional Equities also keeps a buy rating on the stock, raising its fair value estimate to ₹270 from ₹225. Meanwhile, they adjusted their revenue estimates up by 4-5 percent for the years 2025 to 2027, but did slightly lower their earnings per share estimates due to expected drops in Blinkit’s near-term profitability.

On the technical analysis front, some experts are warning that the stock could be overbought after its impressive gains, suggesting that profit-taking may be a wise move. Jigar S. Patel from Anand Rathi pointed out that Zomato has surged past all major moving averages, an indication that it could be due for a price correction.

While the stock remains attractive for long-term investors, Patel advises against initiating new positions at this level and encourages those holding shares to consider locking in gains. He noted the heightened risk of a price drop given the current overbought conditions.

Overall, Zomato’s recent performance has excited analysts and investors alike, setting the stage for what could be a transformative period for the company and its shareholders.