Why Did Zomato’s Stock Dip Despite Robust Q4 Performance, Reasons Explained

Zomato Share Price

Zomato Share Price: Zomato, the biggest food delivery company in India, took everyone by surprise with their stellar Q4 results. They reported a consolidated net profit of Rs 175 crore, a dramatic contrast to the deficit they had during the same time the year before. Zomato’s share price suffered in spite of this good news, falling sharply on the day it was announced. Let’s examine what brought to this situation.

Profit Booking and Market Volatility

Market analysts believe that Zomato’s share price declined because some investors may have booked profits. It’s probable that following a period of strong growth, some investors decided to cash in on their gains. In addition, the ongoing fluctuations in the stock market could have added to investors’ hesitancy and unwillingness to hang onto stocks.

Zomato Share Price: Employee Stock Options Could Be a Culprit

The Zomato shares fall could have also been influenced by company’s recent request for shareholder approval of a new employee stock ownership plan (ESOP). A significant portion of the shares proposed here would be granted to employees, potentially lowering the present shareholders’ ownership stake. This dilution might potentially reduce the value of existing shares in the future.

Analysts Remain Bullish on Zomato’s Long-Term Prospects

Many brokerage companies have kept the stock at a “buy” recommendation, some have even raised their target prices. This upbeat perspective is primarily supported by Zomato’s remarkable performance—led by its subsidiary Blinkit—in the market for quick commerce.

Blinkit’s Rise – A Game Changer for Zomato

Zomato’s recent success has been largely attributed to their quick commerce initiative, Blinkit. With a goal of providing groceries and other necessities in a matter of minutes, this section has accomplished a noteworthy milestone by reaching working breakeven. This shows that Blinkit is now running smoothly, and investors are encouraged by its potential for future expansion.

Aggressive Expansion Plans Fuel Growth for Zomato Share

Blinkit’s potential is being further realised as a result of Zomato’s fast expansion of its dark store network. The purpose of dark stores is to enable speedy delivery by placing warehouses in metropolitan areas. Over the next year, Zomato intends to increase the number of dark shops in order to ensure that Blinkit maintains its position as the industry leader in seamless commerce.

Analysts Believe Zomato is on the Right Track

Because of its focus on speedy trade, financial analysts are hopeful about Zomato’s long-term success. Even though they are aware that the expansion plans would negatively affect profitability in the near term, they still believe that making the investment is necessary to establish long-term dominance in the fast commerce sector. Zomato’s assurance is bolstered by their dedication to achieving a 4-5% adjusted EBITDA objective in the future.

Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited or it’s writer never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)

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