Zomato shares extend gains for 6th straight session to record high, here’s what’s aiding the rally

Zomato shares hit record high levels for a sixth straight session on Friday, April 12, following expectations of strong growth in the food aggregator’s quick service business Blinkit.

Zomato shares opened lower but soon reversed the trend to hit an all-time high of ₹199.7 apiece on the NSE. More than 2.58 crore shares of the company traded on the exchange. The stock witnessed some profit-taking by investors at record levels amid losses in the broader market.

Zomato shares slipped 1.9% to trade at ₹192.25 per unit on the NSE at 1 pm.

Zomato shares have been on an upward momentum hitting record high levels in the last six sessions and have rallied more than 6% since then. The stock has been on a gaining streak since April 4.

In the past month Zomato has surged 25% while in 2024 so far it gave returns of around 57%. The stock has given overall returns of 268% in the past one year.

What is fuelling a rally in Zomato shares?

Expectations of meteoric growth in Zomato’s quick service business Blinkit have been stoking a rally in its shares.

Robust industry tailwinds for delivery service business are expected to benefit Blinkit. Also, Zomato has a strong balance sheet with net cash of ₹12,000 crore as of December 2023 which would boost its valuations.

Blinkit in the near term is also expected to invest more in the expansion of the dark-store network, product depth penetration and adding retail categories.

These investments are expected to boost Blinkit’s gross order value by 15% in FY 2024-25 and by 41% in FY 2025-26, as per market reports.

Zomato reported profits for a third straight quarter in the October-December period. Its profit was ₹138 crore in the December quarter against a loss of ₹347 crore in the year ago period.

The food delivery giant was also hopeful of Bilnkit making an adjusted EBITDA break-even in the first quarter of 2024-25.