India’s Zomato Achieves Record High, Defying Trend Among Internet Stocks
In a remarkable turn of events, Zomato, one of India’s leading food delivery platforms, saw its shares surge to unprecedented levels this past Friday. This significant rise is attributed to the company’s escalating profitability, which has been a key driver behind its growth trajectory, marking a positive shift in investor sentiment towards the firm.
As it stands, Zomato has established itself as the most valuable internet company within India’s vibrant economy, boasting a market capitalization exceeding 1.51 trillion rupees (around $18 billion). The shares of the company experienced a nearly 5% increase, reaching a record 173.5 rupees.
The journey of India’s new-age internet companies, many of which made their debut on the stock market during the 2021 initial public offering (IPO) frenzy, has been a rollercoaster. Despite initial surges post-listing, these firms, including Zomato, confronted investor skepticism. Doubts mainly revolved around their steep valuations and the sustainability of their business models, leading to a slump in their stock performances, with some even dipping below their issue prices.
Zomato’s path was fraught with investor concerns regarding its brief history of profitability and the strategic decisions it was making. Nonetheless, the tide has turned significantly. According to Sachin Dixit, an internet research analyst at JM Financial, “Investors are incrementally appreciative of whatever Zomato is trying to do and there is a certain amount of consumer love for the business model too.”
One of the distinguishing factors propelling Zomato ahead of its competitors is its “consistent earnings improvement” and its ability to meet growth targets efficiently. This has not only improved investor confidence but also set the company apart from its peers, who are struggling to chart a clear course towards profitability, as pointed out by Karan Taurani, an analyst at Elara.
While Nykaa, previously favored by investors, navigates through macroeconomic challenges, and Paytm faces scrutiny from regulatory bodies, Zomato continues to strengthen its position in the market. With over half of the market share in food delivery, the company is poised to maintain its dominance over competitors like the IPO-bound Swiggy.
The acquisition of Blinkit in 2022 marked Zomato’s foray into the quick commerce sector, a move that has been met with optimism by investors. The outlook for Blinkit turning EBITDA-positive in the coming fiscal year is promising, signaling another potential growth avenue for Zomato.
In conclusion, Zomato’s journey in the fiercely competitive internet stock market of India narrates a story of resilience, strategic innovation, and the rewards of persistence. As the company continues to navigate through its challenges, its recent achievements provide a glimmer of hope and excitement for what the future holds.
