Zomato Shares Surge 7% in Early Trading; Here’s the Reason

• ByStartupStory     |    June 3, 2023

Zomato shares experienced a significant surge of over 7% on Friday following the announcement of an investor meeting. The stock’s upward trajectory was further boosted by investor and HNI roadshows in Mumbai on Thursday. This surge in the stock’s value can be attributed to the inclusion of Zomato in Jefferies’ India Long-only portfolio, with a weightage of 4%. The company’s positive performance has also caught the attention of Jefferies’ global long-only equity portfolio, as highlighted in their May edition of ‘Greed & Fear’. 

Zomato has successfully reduced its losses for the January-March quarter to Rs 188 crore, down from Rs 360 crore in the previous year and Rs 345 crore in the previous quarter. Additionally, the company’s consolidated revenue has witnessed an impressive YoY increase of 70%, amounting to Rs 2,056 crore. The net loss incurred by Zomato was significantly lower than the anticipated amount of Rs 356 crore.

Following the release of its financial results, Zomato received assessments from prominent brokerages including Goldman Sachs and Emkay. Both brokerages have recommended a ‘Buy’ rating for the stock. Another contributing factor to the recent surge in Zomato’s value is the positive news surrounding the revision of incentives and discounts at ONDC. After bouncing back from its 52-week low of Rs 40.60, the stock has managed to recover approximately 76% of its losses and is now only slightly below its issue price of Rs 76.

While Zomato shares have experienced negative returns of over 1% and underperformed the Nifty50 index over a 1-year period, the stock has shown better performance on a year-to-date basis compared to the benchmark. Zomato has witnessed a rise of over 18% while the Nifty50 has only managed to achieve a 2% gain. 

However, it’s important to note that Zomato shares have exhibited high volatility with a 1-year beta of 1.46, as reported by Trendlyne. The stock is currently trading at a Price-to-Book (PB) value of 3.13, which is below the industry median. As of now, the market capitalization of Zomato stands at Rs 6,138.40 crore.

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