Foodtech major Zomato‘s stock soared by as much as 4.67 percent, reaching a fresh record peak of INR 173.45. This surge is attributed to the company’s enhanced profitability, signaling promising prospects for future expansion and sparking a notable shift in investor sentiment.
With a market capitalization of over INR 1.51 lakh crore, Zomato stands as the most valuable internet stock in India, Asia’s third-largest economy.
Many of India’s new-age internet companies, which 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.
Continue Exploring: Zomato reports third consecutive profitable quarter with INR 138 Cr PAT in Q3 FY24
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.
However, Zomato’s consistent performance in 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 are increasingly recognizing Zomato’s efforts, alongside a noticeable consumer affinity for its business model.
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, finds itself grappling with certain macroeconomic challenges, while Paytm faces regulatory scrutiny, resulting in a downturn.
Analysts predict that Zomato’s stronghold in the food delivery sector, capturing over half of the market share, gives it a favorable position compared to its IPO-bound competitor Swiggy.
Continue Exploring: Swiggy prepares for IPO with name change to Swiggy Private Limited
Furthermore, Blinkit, the quick commerce business acquired by Zomato in 2022, is expected to reach EBITDA positivity in the next fiscal year, signaling the next stage of growth for the company according to investor perceptions.
At 2:44 pm, Zomato’s shares were trading at INR 166.75 per share, marking a 0.76 percent increase.
Continue Exploring: Zomato’s strong Q3 performance spurs brokerage firms to boost price targets; Blinkit expansion drives optimism
