Shares of the food delivery platform Zomato zoomed over 18 percent on Tuesday after the firm reported March quarter results.
The stock rallied as much as 18.5 percent to its intra-day high of ₹67.60, making it the scrip's biggest intraday surge since listing on July 23, 2021. Thanks to the jump, its market capitalization has also exceeded ₹50,000 crore.
The stock has been on a consistent downtrend since listing. Despite the rise, it is still over 60 percent down from its all-time high of ₹169, hit on November 16, 2021.
The surge came after the firm reported a stellar 75 percent YoY jump in the consolidated revenue from operations at ₹1,212 crore in the March quarter, even though its net losses in the period widened to ₹359 crore, led by higher expenses.
The firm's net loss in the year-ago quarter came in at ₹134.2 crore while its revenue during Q4FY21 stood at ₹692.4 crore.
It also reported a loss in its EBITDA at ₹449.7 crore in Q4FY22 versus a loss of ₹153.5 crore in the corresponding period last year. Its expenses, meanwhile, rose from ₹885 crore in Q4 FY21 to ₹1,701 crore in the quarter ending March 31, 2022, leading to an increase in losses.
However, Zomato's average monthly transacting customers rose to an all-time high of 15.7 million in the March quarter, growing from 15.3 million in the December quarter, making it a key positive for the food aggregator. Its gross order value (GOV) also hit a record high of ₹5,850 crore in Q4FY22, rallying 77 percent YoY driven by healthy growth in order volumes while the average order value remained stable.
Zomato Chief Executive Officer Deepinder Goyal said the company, in the upcoming quarters, is aiming for accelerated growth along with a reduction in losses.
"We are clear on what our long-term shareholders expect of us and we are working hard to deliver on both growth and profitability expectations," he said.
Post the results, various brokerages have also turned positive on the food aggregator stock and upgraded their target prices on it. They believe that downside risk for investors is limited now, and the worst for the company is over.
“Zomato is aiming for accelerated growth, despite which, the focus is on loss reduction, aligning with the long-term shareholder expectation. 1QFY23 loss should come down meaningfully," Jefferies said in a note. It has a buy call on the stock, with a target price of ₹100/share.
UBS noted that Zomato’s Q4 results are slightly ahead of estimates, witnessing a healthy quarter, and sees growth drivers continuing to remain strong going ahead. It has a buy rating on the stock and a target of ₹130/share.
Meanwhile, Morgan Stanley has a target of ₹135/share on the stock, indicating an upside of 110.93 percent, and maintained an overweight stance on the firm. It believes the company’s Q4 numbers were in line with estimates, with improved transparency on segment disclosures. It also sees an improved Q1 outlook and a tighter framework around capital allocation.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
