Zomato Achieves Historic Milestone with First-Ever Quarterly Profit; Shares Surge 12%

Zomato Achieves Historic Milestone: In a remarkable feat, Zomato, the renowned food delivery giant, posted its first-ever quarterly profit during Q1 of FY24. The exciting announcement, made on Thursday, triggered a 12% surge in the company's share price in early trade the next day. The impressive financial performance has ignited enthusiasm among investors and raised expectations for sustained, high growth in the future.

According to the Q1 earnings report, Zomato's net profit for the quarter amounted to ₹2 crore, a notable turnaround from the previous year's loss of ₹186 crore during the same period. The operating revenue for the March quarter also witnessed a substantial increase, rising by 70% compared to the previous year, reaching ₹2,056 crore. Furthermore, the overall revenue for the quarter reached a significant ₹2,416 crore, a remarkable rise from ₹1,414 crore during the same period last year.

The market has warmly embraced Zomato's strong performance and the promise of continued growth. The company's share price opened at ₹89, registering a 12% surge from the closing price of ₹86.22 the day before. The upward trend continued, and the shares reached a peak of ₹98.39 during the morning trade. At the time of writing, Zomato shares were trading at ₹96.23, with a notable increase of ₹10 or 11.61%.

Since its listing in July 2021, Zomato's stock has experienced an eventful journey. With its shares debuting at ₹115, surpassing the issue price of ₹76, the company generated substantial listing gains. Although the initial momentum couldn't be sustained, the recent surge in share price, boosted by the positive quarterly profit report, has reignited investor interest and optimism.

The emergence of Zomato and other innovative internet companies has captured the attention of investors and market enthusiasts. Numerous companies in this category, such as Policybazaar, Nykaa, and Makemytrip, have successfully launched IPOs and listed on the NSE and BSE, creating a surge of interest in the tech sector.

Market analysts are now anticipating continued growth and profitability for Zomato, buoyed by the company's positive outlook for the future. Zomato expects its adjusted revenue to grow by over 40% in the next couple of years while maintaining a profitable trajectory. Reflecting the impressive Q1 results and optimistic outlook, the latest Emkay report has raised its FY24-26E revenue estimates by 13-22%, indicating a better margin trajectory. Consequently, the report maintains a "BUY" rating for Zomato shares, setting a target price of ₹110, up from the previous ₹90.

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