scorecardresearchZomato trades in red zone on Friday following weak Q3FY23 earnings

Zomato trades in red zone on Friday following weak Q3FY23 earnings

Updated: 10 Feb 2023, 11:08 AM IST
TL;DR.
  • Zomato's shares fell 5% on Friday after the company posted a net loss of 346.6 crore in the quarter ended December. Total expenses increased 51% on year to 2,485.3 crore while revenue was 1,948.2 crore. Technical analysis shows the stock is in a range where 49 is the support, and 57-59 is the resistance. According to a Mintgenie poll, 24 analysts recommend a 'buy' rating on the stock.
Zomato slips into red zone on Friday's trade post weak Q3FY23 results

Zomato slips into red zone on Friday's trade post weak Q3FY23 results

Shares of Zomato Ltd slumped over 5% on Friday's early trade and continued to trade in the red zone, after the online food delivery platform posted a consolidated net loss at 346.6 crore in the quarter ended December on the back of higher expenses and slowdown in food delivery business.

At 11:05 IST, the stock hit a intraday low at 50.70 and high at 54.15.

Total expenses jumped over 51% on year for the October-December quarter and stood at 2,485.3 crore versus 1,642.6 crore.

As per company's exchange filing, the consolidated revenue from operations during the December quarter under review stood at 1,948.2 crore. It was at 1,112 crore in the corresponding period a year ago.

"We have seen an industry-wide slowdown in the food delivery business since late October (post the festival of Diwali). This trend has been seen across the country but more so in the top eight cities," said CFO Akshant Goyal in company's exchange filing.

On the technical front, analysts does not see any major trending move as of now. Post the Q3FY23 results, the stock has seen a gap down, and overall its in a range where 49 level is the support, whereas 57-59 level is the resistance.

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Zomato's six months performance

The stock has fallen 46.17% from 52-week high of 95.4, and the stock price fell 42.3% and underperformed its sector by 31.5% in the past year.

According to Prashanth Tapse, Research Analyst, Sr VP Research of Mehta Equities, Zomato has been in focus in the last few days post receiving comments from management hinting profitability sooner or on track with their path to profitability by Q2FY24.

Along with this the company reported higher than expected losses nearly 5x year-on-year (YoY), which disappointed the investors’ expectations. One counterpart, large brokerage houses like CLSA, Goldman Sachs, Morgan Stanley have revised their estimates with overweight/buy views and raising targets in the range of 70-100.

“While we believe Zomato is not yet out of the woods to shine in profitability. The Blinkit deal is still a hurdle and concern for the company as well as investors. We see Blinkit’s business model is still in an early stage, so any strong sequential movement in the business economics of Blinkit will eventually benefit Zomato to its break even targets. Hence we remain neutral to negative on this development,” added Tapse.

According to a Mintgenie poll, 24 analysts recommend 'buy' rating on the stock.

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First Published: 10 Feb 2023, 09:49 AM IST