Zomato ltd, should you buy sell or hold Zomato stock

What is the business model of Zomato Ltd?

Zomato Ltd was one such company listed in the Indian stock market whose business model seemed very attractive to all investors . Zomato Ltd company deals in B to C & B to B services, If we will talk about B to C business, the company offers different online services to its customers, in which search and discover restaurants, order food delivery, book a table , and make payments for dining out at restaurants On the other hand, if we talk about B to B business, then the company generates revenue from supply of high-quality ingredients and kitchen products to restaurants and Zomato Pro, customer loyalty program. The company has a presence in 23 countries. According to company management, more than 131,200 active food delivery restaurants, 161,700 active delivery partners, and an average monthly food order of 11 million customers.

How much return has the stock of Zomato Ltd given after listing of IPO?

Zomato Ltd IPO came in the Indian stock market in price range of 72rs to 76rs, after which the stock of Zomato has also given huge returns to the shareholders. If an investor had  shares allotment inthis IPO  then he/she ha earned more than double return. Zomato stock has hit a 52 week high of 169rs and has not traded below its IPO price price since then (Jan 22, 2022).

Financial performance of Zomato Ltd:

Profit/Loss:

If we will check the last 4 financial years performance then zomato has never come into the profit. In the March 2018, company had reported net loss of (78cr), in March 2018, Zomato ltd had posted net loss of (570cr), In the march 2020 due to pandemic, zomato ltd net loss widen and company had posted net loss of (2451cr) which was a huge loss but in March 2021 zomato has posted loss of nearly( 886cr). We can say that Zomato ltd is an loss making company.

Sales/Turnover

If we will check last 4 financial years performance then total turnover of the Zomato ltd in March 2018 was 371cr which had increased in the march 2019 and company had recorded total turnover nearly 1160cr in march 2019, in March 2020 total sale of the company again increased and it had reached at 2336cr but in march 2021, sale of the company slightly declined and reached at 1713cr. We can say that Zomato ltd sales is increasing but company is not earning profit from last many years.

Should you buy, sell or hold Zomato Stock ?

As we have discussed above that Zomato is an loss making business but in India we can say that demand for online food delivery may increase in the coming years but It may be a risky bet because company management could not post profit in the lasy many years so we can say that fundamentally Zomato Ltd stock is not a good best. Only risky investors should try to take buying positions in Zomato stock at lower levels with the strict stoploss or as per their risk taking ability. Even Stock of Zomato has already wiped out more than 15000cr of investors because in the last few trading sessions, stock of Zomato fallen more than 15% which is not a good sign for the long term investors.  

Technical analysis of Zomato Stock

As Stock of Zomato has not much technical data to give accurate view on the stock because It has listed couple of months back. But still we will try to give best buying or selling levels to our website viewers so that they can take their positions accordingly.

What are the short term targets of Zomato Stock ?

When you should Buy Zomato Stock?

From last couple to trading sessions, stock of zomato is continuously  going down. We will not advice to our website viewers to catch falling knife but still risky traders if want to take buying positions in Zomato stock then Buy Zomato only above 127.50rs price. In this case stoploss will be around 119.80rs on closing basis and Price targets will be around 135rs to 145rs+. This recommendation is only for risky traders those want to buy zomato stock.  Even short term traders and long term investors we use this bounce back for taking exit from Zomato Stock. Otherwise trail your stop losses.

Sell Zomato stock:

As Zomato Stock is in clearly down trend but in any case if stock of zomato take support from the lower levels around 108rs or 105rs price levels then it will be good opportunity for doing short sell the stock on higher levels but highly recommended to keep strict stolosses.

We will not be surprised if in the company days, weeks or months stock of the Zomato will try to touch its IPO price of 72rs to 76rs even below these levels. As we have seen much selling pressure in Zomato stock from the higher levels. It seems that big investors are trying to take exit from Zomato Stock.

If traders want to short sell zomato Stock then keep strict stoploss of 127.50rs on closing basis and always check upper freeze of the stock before making any short sell position in Intraday trading.

Should you invest in Zomato stock ?

We have already discussed above that making investment in zoamto stock is bit risky. Valuations of the zomato looks not attractive. Company could not post profit in the last many years. With the face value of 1rs stock of Zomato is trading around 113.65rs which is still looking very expensive. We may see some bounce back in the stock but It is better to take exit and invest in the any other strong fundamental companies. Zomato ltd is not a bad brand but every company has its own fair value which is yet to come in the zomato stock. We will update our view in the coming months if there will be any fundamental changes will come into the company. As of now, We have negative view on Zomato ltd stock.