Zomato’s share price has captured the spotlight once again, surging by 5% over the past two trading sessions. Investors are now asking the big question: Is there more room for growth? Let’s dive deep into the reasons behind this rally and the possible trajectory of Zomato’s stock.
Zomato’s stock performance is grabbing headlines as the company experiences a notable upswing. Over the last two trading sessions, the Zomato share price has jumped 5%, leaving market watchers wondering if this momentum is sustainable. From its inclusion in the prestigious 30-stock Sensex to strategic financial moves like its Qualified Institutional Placement (QIP), Zomato is making waves in the market. But what’s fueling this growth, and what does the future hold for this food delivery giant? Let’s break it down.
Zomato Share Price Jumps 5%: What’s Driving the Rally?
1. Inclusion in the Sensex: A Major Milestone
Zomato’s inclusion in the 30-stock Sensex has been a significant driver of its recent gains. This move, set to take effect on December 23, 2024, signals strong investor confidence in the company.
- Why is it important?
Companies included in the Sensex are selected based on their average six-month float-adjusted market capitalization. This addition not only enhances Zomato’s visibility but also strengthens its credibility among institutional investors.
2. Qualified Institutional Placement (QIP) Approval
On November 25, 2024, Zomato announced its approval for a ₹8,500 crore QIP, setting a floor price of ₹265.91 per equity share.
- Impact on investors:
The QIP will help Zomato bolster its financial position, paving the way for future growth and expansion in quick commerce and B2C segments.
3. Strong Q2 Results and Positive Analyst Outlooks
Zomato’s second-quarter performance has laid a solid foundation for investor confidence. Analysts expect accelerated growth in the second half of the fiscal year, driven by the festive season.
- Elara Securities’ Perspective:
Elara Securities estimates Zomato’s EBITDA as a percentage of Gross Order Value (GOV) to reach 4-5% by FY27, signaling a robust growth trajectory.
- Axis Securities’ Take:
Axis Securities believes Zomato’s strong brand value and expanding quick commerce operations position it for exponential growth in FY25 and FY26.
Zomato Share Price Jumps 5% in Two Straight Sessions: More Steam Left?
The question on everyone’s mind is whether Zomato’s upward momentum will continue. Analysts believe that Zomato’s recent inclusion in the Sensex and its QIP approval have created a favorable environment for sustained growth. However, the stock’s ability to maintain this rally will depend on external factors like market sentiment and macroeconomic conditions.
Technical Analysis: Is Zomato Poised for a Breakout?
1. Bullish Chart Patterns
Zomato’s weekly charts reveal a bullish flat base range that has persisted for 17 weeks. This technical setup indicates potential upward momentum.
- Key Resistance Levels:
A decisive breakout above ₹300 could propel Zomato towards the ₹450 mark, a significant milestone for long-term investors.
- Expert Opinion:
Anshul Jain, Head of Research at Lakshmishree Investment and Securities, believes this consolidation phase could extend for another 8-10 weeks, building strength for a major rally.
2. Long-Term Growth Indicators
Zomato’s focus on quick commerce and its strong foothold in the food delivery market suggest a bright future. Investors should watch for sustained revenue growth and strategic expansions.
What Analysts Are Saying About Zomato’s Future?
1. Festive Season Boost
Elara Securities expects Zomato to benefit significantly from increased order volumes during the festive season. This uptick in demand could further strengthen its financial performance.
2. Quick Commerce Expansion
Axis Securities highlights the growing demand for quick commerce, an area where Zomato has been aggressively expanding. This sector is expected to drive exponential growth in the coming years.
3. Strong Brand Value
Zomato’s brand equity continues to attract customers, making it a dominant player in the food delivery market.
Investor Sentiment: Why Confidence is High?
1. Institutional Support
The QIP approval has enhanced Zomato’s financial flexibility, attracting institutional investors who view this as a sign of long-term stability.
2. Market Leadership
Zomato’s dominance in the food delivery and quick commerce markets positions it as a leader in the industry.
FAQs
1. Why has Zomato’s share price jumped 5% in two sessions?
Zomato’s inclusion in the Sensex and its ₹8,500 crore QIP approval are the primary drivers behind the recent rally.
2. What is the significance of Zomato’s inclusion in the Sensex?
Being part of the Sensex enhances Zomato’s credibility and attracts institutional investors, boosting its share price.
3. What is a Qualified Institutional Placement (QIP)?
A QIP is a fundraising method that allows companies to raise capital by issuing equity shares to institutional investors.
4. Is Zomato’s stock a good buy now?
While analysts remain optimistic, potential investors should consider technical levels like ₹300 for a breakout and monitor market conditions.
5. What are analysts saying about Zomato’s growth prospects?
Analysts expect robust growth in Zomato’s quick commerce segment, driven by strong brand value and market demand.
6. What technical indicators should investors watch?
Investors should keep an eye on key resistance levels, especially a breakout above ₹300, which could signal further upside.
Conclusion
Zomato’s share price has been on an impressive run, driven by strong fundamentals and market optimism. Its inclusion in the Sensex and QIP approval have set the stage for future growth. While the stock’s technical setup hints at a potential breakout, investors should approach with caution, keeping an eye on key levels and market sentiment. With its strong brand value and expansion into quick commerce, Zomato remains a stock to watch in the coming months.
Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius
