Zomato shares deliver 171% return in a year. Will bullish run continue?

Shares of online food delivery giant Zomato fell sharply on Tuesday, slipping from their record high levels and ending a three-day winning streak.

The stock declined by 5.09% to settle at Rs 217.45, marking a 6.27% drop from its all-time high of Rs 232, reached on July 15.

Despite this recent dip, Zomato shares have delivered an impressive 171.20% return over the past year, positioning the stock as a standout performer in the market.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, told Business Today that Zomato has been one of the year's top-performing stocks, delivering over 170% returns.

He suggested that investors with a high-risk tolerance consider buying the stock on dips, citing the company's forward-looking business model.

Technically, Zomato's stock shows support at Rs 200, followed by Rs 190, with resistance likely around the Rs 225 mark.

Osho Krishan, Senior Research Analyst for Technical & Derivatives at Angel One, told the business daily that Zomato has been on a strong upward trajectory since surpassing the Rs 200 milestone.

He viewed the recent correction as a healthy development within the current bullish trend, with the Rs 200 zone expected to provide intermediate support and a robust support level around Rs 190.

Krishan indicated that the stock faces no apparent resistance levels on the upside.

Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking, echoed similar sentiments, noting that the stock experienced some correction after a sharp uptrend.

He predicted a potential slip towards the Rs 200 level in the near term, with resistance at Rs 225. A decisive close above this level could signal the next phase of the rally.

It may be noted that Zomato reported a consolidated net profit of Rs 175 crore for the fourth quarter of FY24, a significant turnaround from a loss of Rs 189 crore in the same period the previous year.

The company's revenue from operations for Q4 FY24 stood at Rs 3,562 crore, compared to Rs 2,056 crore in the corresponding period last year. Additionally, Zomato's Blinkit (quick commerce) business achieved adjusted EBITDA positivity in March 2024.