As Zomato share price surpasses ₹100 level, analysts turn cautious on ‘unjustifiable’ valuations
Zomato share price jumped as much as 7.77% to hit a 52-week high of ₹102.85 apiece on the BSE. Zomato shares were able to surpass ₹100 for the first time since January 25, 2022. However, analysts believe Zomato share price rally was largely led by the euphoria over the Q1 results with the narrative becoming positive in the market.
“Zomato share price is seeing the rally on the back of euphoria around better Q1 results. However, the company still has a long way to go to become EBITDA positive. All the positives have been factored in by the current share price for the near term.
Hence, we may see profit booking in Zomato share price going ahead after this rally," said Avinash Gorakshakar, Director Research, Profitmart Securities. Gorakshakar believes Zomato share valuations are still very high and does not make sense at these prices. Also Read: Why Zomato Share Price is Rising Today Reiterating similar views, Sudip Bandyopadhyay, Group Chairman of Inditrade Capital, said that he would remain cautious on Zomato share price at these levels.
“The company is on the right direction and has delivered a small net profit. However, we would remain cautions as the financials do not justify the current valuations," Bandyopadhyay said. On August 3, Zomato reported its first ever net profit of ₹2 crore for Q1FY24, beating its own estimate, as against a loss of ₹186 crore, YoY.
The revenue of the company during the quarter rose to ₹2,416 crore from ₹1,414 crore, in the year-ago period. Zomato’s core food delivery business which was in a slowdown mode in H2FY23, returned to strong growth in Q1FY24 at 11% QoQ versus Nomura’s expectation of 9.2% growth and high-single-digit guidance. The growth was led by seasonal factors like the summer
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