HomeStock MarketZomato shares analysis says plunge 5% post Q3 results

Zomato shares analysis says plunge 5% post Q3 results

Popular food chain Zomato shares analysis on its Q3 results. They are quite shocking. Its Q3 loss has narrowed down. What helped it was a one-time gain. Moreover, the revenue increased owing to the increasing demand for restaurant meals. The food delivery platform has reported a net loss of ₹67 crores. However, it also got the boost of a one-time gain of ₹315.8 crores. Sports platform Fitso was responsible for the sale of this stake.  

Zomato’s consolidated revenue

The company’s consolidated revenue from October to December 2021 stood at ₹1,112 crores. That was more as compared to ₹609 crores in the year-ago period. Zomato’s gross order value (GOV) grew by 84.5% YoY. It also grew by 1.7% QoQ to ₹5,500 crores. Abhay Agarwal, Founder, and Manager of Piper Serica has commented on the same. As published in the Mint, he said, “We believe that with its organic and inorganic initiatives and a well-funded balance sheet, Zomato remains the best play in the fast-growing F&B market. While short-term investors may feel disappointed, we believe that Zomato will reward long-term investors handsomely.”

As per Zomato, the weak QOQ growth in GOV was because of a reduction in customer delivery charges. Another reason was the soft impact of the post-COVID reopening.

Zomato shares analysis – Analysts’ views

As reported in the Mint, analysts of the Dolat Capital have commented on Zomato’s plunge in shares. Here is what they said, “Declining Contribution with weak growth in GOV suggests that the growth is getting softer while cost pressures are not moderating. This along with further allocation of ₹5.5 bn on minority investments is straining cash-flows and thus resulting in cut in our DCF value. Maintain Sell rating with target price of ₹75.”

Earlier in July 2021, Zomato had raised ₹8,728 crores via its initial public offering (IPO). It revealed about having used ₹3,267 crores as of 31 December. The food delivery platform revealed the same in its financial statement. As of 2022, its shares have gone down to about 33% 2022.

Anuj Gupta, Vice President of IIFL Securities said, “Zomato stock has corrected sharply after making a high of 169 level in November. Now, below expectation results may put some more pressure in the stock. We are expecting it may correct till 82-80 levels. However, on the charts, it has a strong support around 70 to 75 levels. Investors can wait for these support levels to buy in the stock.”

Zomato shares analysis – what does the food delivery platform say?

Zomato also issued a statement post sharing its share analysis. As per reports, here is what it said, “The consumption of restaurant food has grown manifold in India on the back of higher accessibility, choice and affordability of restaurant food. The restaurant industry in India is highly fragmented with ~90% of the revenue coming from standalone restaurants and only ~10% from chains. In this ecosystem, we have played our part by helping small restaurants level the playing field for themselves and get discovered by new customers.”

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