Cut to budget-conscious Zomato, its share price plunged by more than 9% during Tuesday’s trading session due to poor performance in the just-ended Q3. Zomato said on Monday it had a 57.2% slide in the consolidated net profit for the December quarter earlier at ₹59 crore, following the erosion in margins due to the rapid store expansion to cater to orders for Blinkit. About the same time last year, the company claimed a net profit of ₹ 138 crore.
Zomato share price today, began trade at ₹223.10 on the BSE and going up to an intraday high of ₹227.05 and intraday low of ₹219 per share. Speaking to Osho Krishan, Sr. Analyst, Technical & Derivatives, Angel One, it was revealed that the food delivery giant took a nearly 8 percent beating in its stocks after it released its Q3 earnings report.
This movement led the stock price below the 200 SMA on the daily chart; however, it has formed a bearish candlestick. From a broader technical analysis point of view, the stock has given a breakdown from ‘Double Top’ pattern and as such one can expect further corrections in near future.
Regarding food delivery, Zomato stated a 2% quarter-on-quarter and 17% year-on-year growth in business that the firm described the worldwide industry as experiencing a “demand slowdown,” according to a letter to its shareholders. The consolidated revenue of the company from operations was ₹ 5,405 crore, for the same period of previous fiscal year was ₹ 3,288 crore of December quarter. Total expenses also trebled to ₹ 5,533 crore against ₹ 3,383 crore during the same period of 2023-24.
Nuvama Institutional Equities
According to the brokerage report, Blinkit’s dark store expansion is growing at a faster pace than anticipated and this helps speed up growth, the temporary reasons for revenues and profits may decline as the opening costs for the stores.
Dark Stores have predicted that this buildup of costs of adding more dark stores will create slightly below EBITDA in the short term but profitability will converge to add up in the subsequent quarters as these new stores gain maturity. They continue to have a ‘BUY’ recommendation with a new SOTP based target price of ₹300 from ₹325 as they move to latest FY27 estimates.
Motilal Oswal Financial Service referred as MOFSL.
‘The food delivery is quite defensive and Blinkit is a generational chance of getting into the disruption of everything from retail cum grocery to e-Commerce,’ they added. This work estimates the business using the DCF approach based on the 12.5% cost of capital. This is amid high earnings visibility in Fy21F and Fy22F, attractive valuations and a solid balance sheet, according to the brokerage firm.
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