Zomato Share Price Declines 1.76 Percent; Entry in Nifty50 Index Could Trigger Instituional Buying
Zomato share price declined by 1.76 percent in today's trade and the stock closed at Rs 229.8 after touching an intraday high at Rs 238.73. NSE Nifty closed nearly 0.5 percent lower and selling was witnessed across many sectors. Zomato has declined by 11 percent over the last six months but the stock has offered 6 percent returns over one month. Zomato stock could see re-rating as the company will enter NSE Nifty50 Index in March. Zomato faces competition from Swiggy but the stock has witnessed strong rally over the last few months as the company has improved its operational efficiency.
Analyst Insights
Recent analyst reports present a cautiously optimistic outlook for Zomato. Emkay Global, in its report dated January 28, 2025, assigned a 'Buy' rating with a target price of Rs. 310, suggesting an upside potential of approximately 34.6%. The report highlighted a 12.6% quarter-on-quarter revenue growth in Q3FY25, driven by segments like Quick Commerce (QC), Hyperpure, and Going Out. However, the Food Delivery segment exhibited muted growth, with Gross Order Value (GOV) increasing only by 2.3% QoQ, attributed to a broad-based slowdown from mid-November.
Similarly, Motilal Oswal, on January 28, 2025, maintained a 'Buy' rating with a target price of Rs. 270, indicating a potential upside of 17.2%. The firm reported Q3FY25 revenues of Rs. 54 billion, up 13% QoQ, with growth primarily led by Blinkit, Zomato's quick-commerce arm, which saw GOV surge by 27% QoQ.
Technical Analysis
Candlestick Patterns
An examination of Zomato's daily candlestick chart reveals a 'Doji' pattern on February 20, 2025, characterized by nearly equal opening and closing prices. This pattern suggests market indecision and potential trend reversal. Investors should monitor subsequent sessions for confirmation before making trading decisions.
Fibonacci Retracement Levels
Applying Fibonacci retracement from the 52-week high of Rs. 304.70 to the recent low of Rs. 144.30, key levels are identified as follows:
| Retracement Level | Price (Rs.) |
|---|---|
| 23.6% | Rs. 190.15 |
| 38.2% | Rs. 220.67 |
| 50% | Rs. 224.50 |
| 61.8% | Rs. 258.33 |
| 76.4% | Rs. 288.85 |
The stock is currently trading above the 50% retracement level of Rs. 224.50, indicating potential support. A sustained move above Rs. 258.33 (61.8% retracement) could signal bullish momentum, while a decline below Rs. 224.50 may suggest further downside.
Support and Resistance Levels
Immediate Support: Rs. 224.50
Immediate Resistance: Rs. 238.73
Breaching the support at Rs. 224.50 may lead to further downside, whereas surpassing the resistance at Rs. 238.73 could pave the way for upward movement toward the Rs. 258.33 mark.
Competitive Landscape
In the quick-commerce and online food delivery sectors, Zomato faces competition from:
Swiggy: A major player in India's quick-commerce industry, Swiggy continues to expand its delivery network and restaurant partnerships. However, concerns over the sustainability of the quick-commerce model remain, given its reliance on investor funding and narrow profit margins.
Amazon India: The e-commerce giant has ventured into the quick-commerce space, leveraging its extensive logistics network to offer rapid deliveries. Amazon's entry intensifies competition, potentially impacting market share and profitability for existing players like Zomato.
