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Zomato , one of India’s leading food delivery platforms, has seen significant growth in its market capitalization, reflecting a strong presence in the stock market. With a current market cap of ₹2,38,281 crore and a share price hovering around ₹270 , Zomato’s position in the e-commerce and aggregator sector has continued to solidify. As a high-growth tech stock , it remains a focal point for investors seeking exposure to India’s rapidly expanding digital economy.
Current Price: ₹270 52-Week High/Low: ₹298 / ₹112 Market Cap: ₹2,38,281 Cr P/E Ratio: 321 Book Value: ₹24.1 ROCE: 1.14% ROE: 1.
12% Face Value: ₹1 Zomato’s high P/E ratio of 321 indicates that investors are paying a premium for the stock, anticipating future growth. However, the ROE of 1.12% and ROCE of 1.
14% suggest that the company is still finding its footing in terms of profitability. This is not unusual for tech-oriented and high-growth firms that focus on customer acquisition and scaling rather than immediate profitability. The Zomato stock chart shows recent bullish momentum, with the price reaching ₹270 .
The stock has seen a steady climb from its low point earlier in the year, reflecting investor confidence. The daily chart suggests that Zomato is above key moving averages, including the 50-day and 100-day moving averages , indicating strong short-term momentum. RSI: The Relative Strength Index (RSI) stands at 57.
13 , indicating that the stock is not overbought or oversold. This neutral RSI suggests that there could be room for further upward movement if the trend continues. Fisher Indicator: The Fisher indicator on the hourly chart shows a positive value, signalling buying pressure in the short term.
This points towards potential bullish sentiment among traders, especially if the stock breaks its recent resistance levels. Debt-Free Balance Sheet: Zomato operates with minimal debt, reducing financial risk. This debt-free structure allows the company to invest in expansion without the burden of high-interest costs.
Positive Quarter Expectations: Market analysts expect positive quarterly results, indicating potential revenue growth and operational improvements. Reduced Working Capital Requirements: Zomato has effectively managed its working capital, reducing it from 191 days to 46 days . This efficiency highlights operational improvements, which are critical for scaling a business of this nature.
High Valuation: The stock is trading at 11.2 times its book value , indicating a high premium. This could pose a risk if the company fails to meet high growth expectations.
Low Return on Equity: Zomato’s ROE over the last three years stands at -4.80% , reflecting low returns for shareholders. Other Income Contribution: The company’s earnings include ₹911 crore from other income, which may not be sustainable in the long run.
Relying on non-core income can create inconsistencies in financial performance. In the competitive landscape of e-commerce and aggregators, Zomato has several key rivals: Info Edge (India): Trading at ₹7,768.20 with a P/E of 208.
13 and a market cap of ₹1,00,663 crore , Info Edge holds a strong position in digital investments. However, its quarterly profit variance is negative at -91.06% , indicating volatility.
Swiggy: As a direct competitor in food delivery, Swiggy is priced around ₹430.70 with a market cap of ₹96,409 crore . However, Swiggy faces losses with a quarterly profit of -₹611 crore , showcasing operational challenges.
One97 Communications (Paytm): At ₹769.10 , with a market cap of ₹48,971 crore , Paytm operates in digital payments and financial services. Like Zomato, it is positioned as a high-growth tech stock but faces profitability issues.
Indiamart Intermesh: With a P/E ratio of 31.82 and a market cap of ₹13,700 crore , Indiamart focuses on B2B e-commerce, showing stability with a higher ROCE of 23.93% .
Zomato has seen a consistent rise in revenue, driven by growing customer adoption. Here’s a breakdown of recent quarterly performance: Revenue Growth: Zomato’s revenue for the September 2024 quarter stood at ₹4,799 crore , reflecting a 68.5% increase year-over-year.
Operating Profit Margin (OPM): The OPM improved to 5% , compared to negative margins in prior periods. This shift towards profitability is a positive signal for long-term growth. Net Profit: Zomato achieved a net profit of ₹176 crore , representing a marked improvement over previous quarter.
However, profitability remains a challenge as the company invests heavily in marketing and expansion. Zomato’s annual performance over the past few years has shown impressive revenue growth but limited profitability. Revenue Growth: In the last five years, Zomato’s revenue has compounded at 56% , with the latest trailing twelve months (TTM) growth at 71% .
Profitability Challenges: Despite growing revenues, Zomato’s net profit margins have remained low. The reliance on other income highlights the challenges in achieving sustainable core earnings. Zomato’s growth strategy centres around expanding its customer base, improving delivery efficiency, and entering new markets.
Some of its key initiatives include: Hyperpure Supply Chain: Zomato’s Hyperpure initiative focuses on providing high-quality ingredients to partner restaurants, enhancing service quality and strengthening relationships with suppliers. Zomato Gold Membership: The premium membership program, Zomato Gold, aims to retain loyal customers by offering discounts and benefits. This program drives engagement and encourages repeat orders, improving customer lifetime value.
Investment in Logistics Technology: By investing in logistics technology, Zomato aims to reduce delivery times, optimize routes, and improve overall customer satisfaction. This investment is critical as speed and efficiency remain top priorities for consumers. The Indian food delivery market is expected to continue growing as internet penetration and disposable income increase.
Zomato, with its strong brand recognition, stands to benefit from this trend. However, maintaining profitability will be crucial as competition intensifies. The company's ability to balance growth with financial prudence will play a key role in its long-term success.
Zomato represents an interesting investment opportunity within the tech and e-commerce space. Its high growth potential, minimal debt, and focus on operational efficiency make it appealing for growth-oriented investors. However, the stock’s high valuation and low profitability metrics indicate risk, especially for those seeking stability.
For investors comfortable with volatility and willing to bet on the long-term potential of digital transformation in India, Zomato could be an attractive option. However, maintaining realistic expectations regarding profitability and growth targets is essential. As Zomato continues to evolve, it remains a dynamic player to watch in India’s rapidly expanding digital economy.
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