Zomato Shares price Surge 19%: With a 170% Gain Over the Past Year, Is the Stock Still Worth Buying After Q1 Results?

Zomato share price surged an impressive 170% over the past year through August 1. The company’s consolidated net profit for Q1FY25 skyrocketed to ₹253 crore, up from just ₹2 crore in the same quarter last year.

On Friday, August 2, Zomato share price surged 19% in morning trade, reaching a new all-time high of ₹278.45. This rally followed the company’s Q1FY25 results announcement. The stock opened 5% higher at ₹244 on the BSE.

As previously reported by Mint, Zomato’s consolidated net profit for Q1FY25 skyrocketed to ₹253 crore, up from ₹2 crore in the same quarter last year. This substantial increase was driven by a higher gross order value across its food delivery, quick commerce, and dining-out verticals.

The company’s consolidated revenue for the quarter stood at ₹4,442 crore, a significant rise from ₹2,597 crore the previous year.

The stock ended Thursday 2% higher, closing at ₹234.10.

Zomato share price has surged an impressive 170% over the past year up to the close on August 1. Despite these substantial gains, most brokerage firms still consider the stock a strong buy, citing the company’s robust growth and profitability prospects.

Brokerages Remain Bullish After Strong Q1 Performance

Several brokerages have expressed positive views on Zomato’s stock and have raised their target prices following the company’s stronger-than-expected Q1 results.

Nuvama Wealth, for instance, has maintained a buy rating on the stock and increased its target price to ₹285 from ₹245. Nuvama highlighted that Zomato continues to meet its growth and profitability targets.

“The company has once again exceeded expectations across the board. Management has projected over 20% growth in the short term for food delivery and aims to expand Blinkit’s dark store count from 639 in Q1FY25 to 2,000 by the end of CY26,” noted Nuvama.

Brokerage firm Motilal Oswal Financial Services has also maintained a buy rating on Zomato, setting a target price of ₹300, which suggests a 28% potential upside.

Motilal Oswal noted that Zomato’s food delivery business remains stable and that Blinkit represents a significant opportunity to impact industries like retail, grocery, and e-commerce.

Similarly, Kotak Institutional Equities has upheld its buy rating and revised its SoTP-based fair value target to ₹270, up from ₹225.

Kotak has increased its revenue forecasts for Zomato for FY25-27 by nearly 4-5% due to higher expected revenues from food delivery and Blinkit. However, it has reduced EPS (earnings per share) estimates by 7-9% due to lower near-term profitability from Blinkit.

“We appreciate the company’s strong execution across its verticals. Stable food delivery growth and margins lead us to adjust our WACC (weighted average cost of capital) assumption to 12.5%,” stated Kotak.

While the stock is considered a strong buy for the long term, some technical analysts warn that recent sharp gains have pushed it into the overbought zone. Therefore, profit booking at this point might be prudent.

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, noted that Zomato’s stock has surged significantly over the past two months, surpassing all major key moving averages, including the 21-day, 50-day, 100-day, and 200-day exponential moving averages (DEMA).

Patel emphasized that trading well above these moving averages suggests the stock may be overextended and vulnerable to a pullback. In such situations, the risk of a price correction increases as investors might start taking profits, creating selling pressure.

“We recommend against starting new long positions at these elevated levels. For current investors, it would be wise to consider booking profits to secure gains, as the current overbought condition could lead to a potential decline in the stock price in the near term,” Patel advised.