Zomato shares fall sharply for second day

 Zomato shares fall sharply for second day. Should you buy?

Zomato shares continued to increase the autumn for the second consecutive day on Tuesday after plunging nearly 9% in Monday’s session because the mandatory 30 days lock-in period for anchor investors ended. Shares of the web food delivery platform declined over 3% to ₹123 per share on the BSE in Tuesday’s opening deals, registering a fall of over 13% within the last two days.

Santosh Meena, Head of Research, Swastika Investmart on Zomato share price falling said, “It has been observed that some selling pressure is seen for 1-2 days in most of the counters after the lock-in period ends for his or her anchor investors post listing but it acts as a buying opportunity in most of the standard stocks where low made during this era acts as strong support for subsequent leg of rally. If we mention Zomato then 120 is robust support and that we could see some buying attraction around this level.”

Domestic brokerage and research firm ICICI Securities on Monday said that it’s initiated coverage with a Buy rating on  and sees it as an excellent value stock unlike what street believes it to be. It sees huge upside on the home-grown food-delivery company’s stock with a target price of ₹220 per share. Its target price bets on around 22 million Indians ordering ~4 times per month in FY25E.

“Contrary to its global peers (DoorDash and Amazon etc.), Zomato witnessed a pointy and artificial drop by key metrics during the primary wave. Accordingly, we expect a strong recovery going ahead. This recover should quite offset the unlock-led uptick in physical channel activity the near term. Nevertheless, the normalisation of AOVs and increasing bargaining power of restaurants are key variables to observe out for,” the brokerage said during a note.

In its first earnings release after last month’s blockbuster initial public offering (IPO), the food-tech company reported a net loss to ₹360.7 crore for June quarter as compared to ₹99.8 crore in-the year-ago period.

Those at Jefferies during a note post the Q1 results said that Zomato reported a robust beat on revenues led by +37% quarter-on-quarter (QoQ) in GOV (gross order value). ”While delivery business was strong, dining-out was impacted by the second Covid wave. YoY numbers are very strong given the impact of first Covid wave within the base,” it said. The brokerage features a Buy rating on the stock with the target price of ₹175 per share (from ₹170), the note on August 10 stated.

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