Zomato share price hits 52-week high, here's what driving the rally

livemint.com:

Zomato shares experienced a notable surge of 6 percent during morning trading on February 12, reaching a fresh 52-week pinnacle of ₹158.80 on the National Stock Exchange (NSE). This surge propelled the stock closer to its record peak of ₹169, attained on November 16, 2021. The upswing follows Zomato's impressive financial performance, with the Gurugram-based food aggregator reporting a consolidated net profit of ₹138 crore for Q3FY24, a significant turnaround from the net loss of ₹347 crore in the corresponding period of the previous fiscal year.

Also read: SJVN share price down 19% after 51% drop in Q3 net profit A key driver behind this positive trajectory has been Zomato's enhancement of its contribution margin, a crucial profitability measure, which expanded to 7.1 percent in the December quarter. This improvement was attributed to the introduction of a platform fee for food deliveries. As of 1:38 pm, the stock was trading 3 percent higher at ₹155.20 on the NSE.

Zomato's remarkable performance over the past year underscores its status as a multibagger stock, having surged by over 200 percent. This stellar growth outpaces the benchmark Nifty, which has seen a comparatively modest increase of 21 percent during the same period. Brokerage firm Elara Securities downgraded the stock to ‘Accumulate’ from ‘Buy’, while raising target price from ₹165 to ₹150.

“We downgrade ZOMATO to Accumulate from Buy (stock has moved up by 50% in the last six months, largely factoring healthy growth and profitability) with raised SOTP-TP of INR 165 from INR 150, as we have raised the target one-year fwd. EV/EBITDA of food delivery to 50x (from 47x). Good execution on growth and profitability in the food/quick commerce businesses are key