Zomato's Shares Reach Five-Month High, Soaring by 27% in a Month
Shares of Zomato, the Indian food delivery company, reached a five-month high on Thursday, closing at Rs 65.70 a unit, up more than 3% on the Bombay Stock Exchange (BSE). However, the shares slightly declined to settle at Rs 65.41 per share on Friday, down 0.34%. The stock's value jumped to Rs 66.46 per share on Thursday, marking the best value in the past five months, since it closed at Rs 65.5 per share in December 2022.
Zomato's shares have increased by 27% over the last month, outperforming the benchmark Sensex, which has only risen by 4% in the same period. Brokerage firms have also expressed optimism about the company's future expansion prospects.
Despite the significant increase, the price of Zomato's shares remains below the issue price. The company made its debut on the Indian stock exchanges on July 23, 2021, at an issue price of Rs. 76 per unit. The stock price of Zomato has increased by 7% in the past year and by more than 10% since 2023.
According to Motilal Oswal, Zomato is a significant participant in the meal delivery industry, and the firm is expected to expand its sales at a compound annual growth rate (CAGR) of 29% between FY23 and FY25. Despite facing fierce competition due to its tremendous development, Zomato is anticipated to turn a profit by FY25. Rising internet connectivity, increased consumption, and urbanization are expected to contribute to the food delivery industry's significant growth in India in the coming years.
The local brokerage firm also predicts that Zomato's growing use and acceptance will result in a 13% CAGR of monthly transacting users (MTU) from FY23 to FY25. Zomato's food division reached Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) breakeven in the first quarter of FY23, and the firm is expected to turn a profit by FY25.
In conclusion, Zomato's stock has seen significant growth over the past month, despite facing fierce competition in the meal delivery industry. The company is expected to expand its sales and turn a profit by FY25, thanks to rising internet connectivity, increased consumption, and urbanization, which are expected to fuel the food delivery industry's growth in India in the coming years.