As of January 20, 2025, Zomato Ltd. (NSE: ZOMATO) is trading at ₹253.05 per share.
Technical Analysis:
- Moving Averages: The stock is trading below its 20-day and 50-day exponential moving averages, indicating a bearish trend.
- Relative Strength Index (RSI): The RSI is at 32.22, suggesting the stock is approaching oversold territory.
- MACD: The Moving Average Convergence Divergence (MACD) is trending below the signal line, indicating bearish momentum.
- ADX: The Average Directional Index (ADX) is at 18.95, reflecting a weak trend strength.
Fundamental Analysis:
- Market Capitalization: ₹240,100.72 crores.
- Price-to-Earnings (P/E) Ratio: 146.06, indicating the stock may be overvalued compared to the industry average.
- Return on Equity (ROE): -4.80% over the last three years, indicating negative returns to shareholders.
- Shareholding Pattern (as of December 2024):
- Promoters: 0.00%
- Foreign Institutional Investors (FII): 47.30%
- Domestic Institutional Investors (DII): 20.54%
- Public Investors: 7.46%
Recent Financial Performance:
- Q3 FY2025: Zomato reported a 57% decline in net profit to ₹590 million, down from ₹1.38 billion in the same period the previous year. This decline is attributed to increased competition and higher expenses related to the expansion of Blinkit, its quick commerce platform. Revenue rose by 64% to ₹54.05 billion, with food delivery revenue increasing nearly 22% and Blinkit’s revenue more than doubling.
Analyst Recommendations:
- The average 1-year price target is ₹314.56, with a low estimate of ₹131.3 and a high estimate of ₹393.75.
Conclusion:
Zomato Ltd. is currently exhibiting bearish technical indicators, with the stock trading below key moving averages and momentum oscillators suggesting potential oversold conditions. Fundamentally, the company shows a high P/E ratio and negative ROE, indicating potential overvaluation and inefficiency in generating profits from shareholders’ equity. The recent decline in net profit highlights challenges in maintaining profitability amidst competitive pressures and expansion costs. Investors should exercise caution and consider both market conditions and company performance before making investment decisions.
