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Zomato shares soar 19% as Street cheers Deepinder Goyal's positive growth outlook

Zomato shares soar 19% as Street cheers Deepinder Goyal's positive growth outlook

Zomato shares soar 19% as Street cheers Deepinder Goyal's positive growth outlook
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By CNBCTV18.com May 24, 2022 12:48:45 PM IST (Published)

Zomato share price: Despite Zomato’s consolidated net loss widening in the March quarter, shares of the online food service company soared as much as 19 percent on Tuesday as investors cheered the upbeat commentary by the management. Deepinder Goyal, Managing Director and Chief Executive Officer, said, “We think our growth trajectory is back on track, and we don’t foresee ‘post-COVID ramifications’ affecting our growth rate anymore”.

Despite Zomato’s consolidated net loss widening in the March quarter, shares of the online food service company soared as much as 19 percent on Tuesday as investors cheered the upbeat commentary by the management.

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At 11:32 IST, shares of Zomato were trading 10.8 percent higher at Rs 63.15 on the BSE.
Zomato, share price, stock market india, results Zomato shares touched an intraday high at Rs 67.6 on the BSE today. (Source: BSE)
Deepinder Goyal, Managing Director and Chief Executive Officer, said, “We think our growth trajectory is back on track, and we don’t foresee ‘post-COVID ramifications’ affecting our growth rate anymore.”
He said that even before COVID, growth in Zomato’s business had been lumpy and not linear, so he cautioned investors to take a long-term view of the company’s business.
With the adjusted earnings before interest tax depreciation and amortisation (EBITDA) losses declining in the last two quarters, Goyal said that the company aims to accelerate growth and scale down losses.
Zomato is working hard to deliver on both growth and profitability expectations, he added.
Meanwhile, Akshant Goyal, Zomato’s Chief Financial Officer, sees adjusted revenue growth accelerating to double-digits in the next quarter and the adjusted EBITDA losses also coming down meaningfully. He said that the reduction in losses would be driven by improvement in the contribution margin of the food delivery business and also operating leverage playing out as its revenue is growing faster than fixed costs.
Have a look at the company's quarterly earnings:
Consolidated basis Q4 FY22Q4 FY21
Net loss (in Rs crore)359.7130.8
Revenue (in Rs crore)1,211.8692.4
Morgan Stanley said that March quarter numbers were in-line with improved transparency on segment disclosures. The brokerage house liked that the company gave a better outlook for the first quarter of FY22 and a tighter framework around capital allocation.
"Zomato is moving in the right direction but needs consistent execution to meet high expectations," the foreign brokerage house said.
Further, UBS Securities also highlighted that the company’s disclosures have improved in the reporting quarter, which is a positive. The brokerage house sees growth drivers remaining strong going ahead.
Here's a snapshot of rating and target price given by some brokerage firms:
Brokerage FirmRatingTarget price (in Rs)
1Morgan StanleyOverweight135
2UBS SecuritiesBuy130
3JP MorganOverweight130
4CitiBuy80
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