Updated March 1st, 2024 at 16:07 IST

Zomato shares surge 5%, hits all-time high

The rise comes as the company's enhanced profitability signals promising prospects for future expansion, sparking a notable shift in investor sentiment.

Reported by: Business Desk
Zomato hits all time high | Image:PTI/ Representational
Advertisement

Zomato at record high: Food aggregator Zomato soared as much as 4.67 per cent to reach a fresh record peak of Rs 173.45. The rise comes as the company's enhanced profitability signals promising prospects for future expansion, sparking a notable shift in investor sentiment.

With a market capitalisation exceeding Rs 1.51 lakh crore, Zomato stands as the most valuable internet stock in India, Asia's third-largest economy.

Advertisement

Many of India's new-age internet companies that went public during the IPO frenzy of 2021 experienced initial surges post-listing but later faced declines due to investor concerns regarding inflated valuations and business sustainability.

Zomato, among the first to debut alongside peers such as Policybazaar, Paytm, and Nykaa, initially faced scrutiny due to its limited profitability track record and uncertain strategic moves.

Advertisement

However, Zomato's consistently surpassing expectations in quarterly results has led to a complete reversal in sentiment, according to Sachin Dixit, an internet research analyst at JM Financial. 

Investors now increasingly appreciate Zomato's endeavors, coupled with a notable consumer affinity for its business model.

Advertisement

Distinguishing itself from peers lacking clear paths to profitability, Zomato has showcased "consistent earnings improvement" and timely achievement of growth targets, as highlighted by Elara analyst Karan Taurani.

Meanwhile, Nykaa, once a favorite among investors, currently grapples with certain macroeconomic challenges, while Paytm faces regulatory scrutiny, resulting in a downturn.

Advertisement

Zomato's dominance in the food delivery sector, claiming over half of the market share, positions it favorably against its IPO-bound competitor Swiggy, analysts predict.

Additionally, Blinkit, Zomato's quick commerce business acquired in 2022, is anticipated to achieve EBITDA positivity in the upcoming fiscal year, marking the next phase of growth for the company as perceived by investors.

Advertisement

As of 2:44 pm, shares of Zomato were trading 0.76 per cent higher at Rs 166.75 per share.

(With Reuters Inputs)

Advertisement

Published March 1st, 2024 at 14:46 IST