Zomato stock zooms 18% intraday on improved disclosures, gains 14% at close

7-8 large brokerages have come out with recommendations of overweight to buy since the firm announced its results on Monday after market hours

Food aggregator platform Zomato’s stock touched an intra-day high of Rs 67.60 per share, up 18.6 per cent from the previous close of Rs 57. The stock closed at Rs 64.95 per share, gaining almost 14 per cent over the previous close. The reason for the jump in share prices was due to improved disclosure, say experts.

Seven to eight large brokerages have come out with recommendations of overweight to buy since the company announced its results on Monday after market hours.

“The management proactively improved disclosures and addressed key issues. Focus is growth along with loss reduction, a tough balancing act but mgmt. seems to be committed. Financial discipline is also evident with focus on cash conservation. Suspense remains on Blinkit acquisition,” said a Jeffries India report.

The report further stated: “Zomato is aiming for an accelerated growth, despite which, the focus is on loss reduction, aligning with the long-term shareholder expectation. The Q1FY23 loss should come down meaningfully. Contribution margin (as a percentage of GOV) is likely to get to a double-digit in the long term, with some cities already at this level. Zomato still expects to lower the delivery cost through better fleet utilisation.”

Zomato said its consolidated net loss for the quarter ended March widened to Rs 360 crore from Rs 134.2 crore in the corresponding quarter last year. The revenue from operations came in at Rs 1,211.8 crore, up 75.01 per cent over Rs 692.4 crore in the same quarter last year.

The company said it launched in over 300 new cities in Q4FY22. It is now present in over 1,000 towns and cities across India.

Zomato chief financial officer Akshant Goyal said the firm expects its Adjusted Revenue growth to accelerate to double digits in the next quarter and the Adjusted EBITDA losses to also come down meaningfully. “Reduction in losses will be driven by improvement in contribution margin of the food delivery business and also operating leverage playing out as our revenue is growing faster than our fixed costs,” said Akshant Goyal.

Average monthly transacting customers were at an all-time high of 15.7 million last quarter growing from 15.3 million in the previous quarter. Likewise, average monthly active restaurant partners and delivery partners were at all-time highs as well