Zomato, the popular food delivery platform, recently reported its financial results for the fourth quarter of the fiscal year 2024. The company’s shares fell by 6% in early trade on Tuesday following the announcement. This article analyzes the financial performance, market reaction, and expert opinions to determine whether it is an opportunity to buy Zomato shares.
Financial Performance:
Zomato’s consolidated net profit for the fourth quarter stood at ₹175 crore, marking a significant improvement from the loss of ₹188 crore in the same period a year ago. The company’s revenue from operations also increased to ₹3,562 crore, up from ₹2,056 crore in the corresponding period a year ago. Additionally, Zomato’s quick commerce arm, Blinkit, achieved operational EBITDA break-even in March 2024, further boosting investor confidence.
Market Reaction:
Despite the strong financial performance, Zomato shares declined as much as 5.98% to ₹182.10 apiece on the BSE. The fall can be attributed to profit-taking and ongoing market volatility. Another factor that may have contributed to the decline is the elevated employee stock ownership plan (ESOP) costs.
Expert Opinions on Zomato Shares
Elara Capital, a leading financial services firm, maintained its ‘Buy’ rating on Zomato shares and raised its price target to ₹280 apiece from ₹250 earlier. The brokerage cited the company’s strong financial performance and the operational EBITDA break-even achieved by Blinkit as reasons for the upgrade.
Another market expert, speaking to India Today, mentioned that the decline in Zomato shares could be due to profit-taking and ongoing market volatility. The expert also highlighted that the company’s strong Q4 performance should not be overlooked and that it may present an opportunity for long-term investors to accumulate shares at a discounted price.
Conclusion:
Zomato’s strong financial performance in the fourth quarter, coupled with Blinkit’s operational EBITDA break-even, presents a positive outlook for the company’s future growth. While the short-term market reaction has been negative, with shares falling by 6%, the long-term prospects for Zomato remain promising.
For potential investors, the current dip in Zomato’s share price could be an opportunity to buy the stock at a discounted rate. However, it is essential to conduct thorough research and consider individual risk tolerance before making any investment decisions.