Shares of Zomato have rallied 21% since June 4, the day the elections were concluded, compared with an 11% rise in the S&P BSE Sensex during this period, outperforming the latter by nearly two times. On Tuesday, the stock closed above the previous week’s high, registering a weekly breakout. The stock is a momentum pick, say analysts who see up to 20% upside from current levels.

On Wednesday, Zomato shares hit a fresh 52-week high of Rs 213.80 on the BSE before settling with minor declines at 208.15, down 0.43 per cent.

While there are several technical indicators to assess whether the stock is in momentum or not, ETMarkets picked Zomato based on its close above last week’s high of 204.70.

ETMarkets.com

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Zomato shares have surged 175% in the past 12 months, while its gains for 2024 so far stand at around 70%. The stock is also trading above its 50-day and 200-day simple moving averages (SMAs), with the day’s MFI sitting in a deep overbought zone around 81.

Its 1-year beta is 0.6%. Beta is a measure of a stock’s volatility and a number less than 1 is considered less volatile.

Expert advice

The stock has formed higher highs and higher lows for the last four consecutive weeks, indicating sustained buying activity, said Rajesh Palviya, senior vice-president, technical research and derivatives, Axis Securities, adding that the stock has managed to break out of a three-month consolidation range.

Daily and weekly strength indicators, such as the RSI, have turned bullish, indicating growing strength, Palviya said, anticipating the stock will continue to rise towards the 240-250 range.

He recommends buying, holding or accumulating this stock, maintaining a downside support zone at Rs 195-185 levels.

Rahul Ghose, CEO, Hedged.in, believes that Zomato is strong on the medium to long term charts with an estimated 20% upside from current levels. According to him, the stock could see some consolidation in the near term as the Nifty looks tired at 24,300 and could see another rally not exceeding 200-300 points. Any close below the 192 level becomes a buying opportunity on this counter.

Nilesh Jain, Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking, does not see any favourable risk-reward for long positions at current levels, despite the ongoing uptrend. One has to wait for a dip for a fresh entry, Jain said, placing immediate support at 193 levels.

Fundamentally, the company has delivered “exceptional results” over the past 10 quarters, Ghose said.

Zomato has posted a consolidated net profit for four consecutive quarters, compared to net losses in the previous quarters. Its consolidated revenue has been steadily increasing.

The food delivery platform reported a consolidated net profit of Rs 175 crore for the quarter ended March 31, 2024, as against a loss of Rs 188 crore recorded in the same period of the previous year. Revenue from operations during the quarter under review stood at Rs 3,562 crore as against Rs 2,056 crore recorded in the corresponding quarter of the previous financial year.

The company’s continued growth in its core food delivery business along with its expansion into new verticals such as grocery and nutraceuticals bodes well for the stock’s outlook, Palviya noted.

Also read: Momentum Pick: Will this multibagger’s weekly breakout lead to a new rally leg?

(Disclaimer:The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of Economic Times)