Shares of Zomato, the prominent online food delivery and aggregator platform, have been on an impressive upward trajectory in 2024. As of December 5, 2024, Zomato’s stock reached an all-time high of ₹299.25 per share on the Bombay Stock Exchange (BSE), marking a remarkable milestone for the company. The stock surged by 4.5%, peaking at this record level, with the shares trading at ₹296.25 at 10:08 AM, reflecting a 3.48% increase on the day.
With a substantial over 130% return on its stock price so far in 2024, Zomato has proven to be one of the standout performers in the Indian stock market this year. The surge in Zomato’s stock price comes amid several strategic moves by the company, including successful fundraising and strong quarterly results, which have fueled investor confidence.
Zomato’s Successful Fundraising Strategy
A key driver of the stock’s upward momentum was Zomato’s recent successful fundraising efforts. In late November 2024, Zomato announced that it had raised an impressive ₹8,500 crore through a Qualified Institutional Placement (QIP). This capital was raised by selling equity shares to qualified institutional investors, marking a significant step in the company’s growth strategy.
The CEO of Zomato, Deepinder Goyal, explained that the funds would be used to strengthen the company’s balance sheet and support its future growth objectives. As part of the QIP, Zomato issued a total of 33.65 crore shares at an issue price of ₹252.62 per share. The shares were allotted at a 5% discount from the floor price, which was set at ₹265.91 per share.
The QIP was launched on November 25, 2024, and the equity sale was well received by institutional investors. This fundraising initiative is expected to provide Zomato with the necessary capital to expand its business operations and pursue new growth opportunities, further bolstering its position in the competitive food delivery market.
Zomato’s Strong Financial Performance in Q2 FY25
Another contributing factor to Zomato’s stock surge has been its strong financial results for the second quarter of the fiscal year 2025 (Q2 FY25). Zomato reported a consolidated net profit of ₹176 crore for Q2 FY25, marking a significant improvement compared to the ₹36 crore profit recorded during the same quarter in the previous fiscal year.
Zomato’s revenue from operations also saw an impressive increase, rising to ₹4,799 crore, compared to ₹2,848 crore in the same quarter last year. This strong growth was driven by higher revenue from food delivery, as well as new business verticals acquired earlier in the year. The company’s total expenses for the quarter amounted to ₹4,783 crore, an increase from ₹3,039 crore in Q2 FY24.
In addition to its solid financial results, Zomato noted that its performance for the quarter was impacted by its acquisition of Orbgen Technologies Pvt. Ltd (OTPL) and Wasteland Entertainment Pvt. Ltd (WEPL), which brought the company into new sectors, including movies ticketing and events management. These acquisitions, completed in August 2024, have contributed to Zomato’s expansion into new verticals, diversifying its revenue streams.
Zomato’s SENSEX Milestone
In another significant achievement, Zomato is set to join the prestigious SENSEX index on December 23, 2024. This inclusion is a reflection of the company’s growing stature in the Indian stock market. The SENSEX index, which tracks the performance of the 30 largest and most actively traded companies on the Bombay Stock Exchange, is seen as a benchmark for India’s economic health and market performance.
Zomato’s entry into the SENSEX marks a key moment in its journey and demonstrates investor confidence in the company’s future prospects. The company’s remarkable rally, which has seen its stock rise by 154% in the past 12 months and 138% in 2024, reflects the increasing optimism surrounding Zomato’s growth trajectory.
What’s Next for Zomato Investors?
With its strong financial performance, strategic acquisitions, and upcoming inclusion in the SENSEX, Zomato is well-positioned to continue its growth in the coming months. The company has been executing its strategies effectively, driving both revenue and profitability. The recent rally in its stock price shows that investors are bullish on Zomato’s future prospects.
For investors looking to capitalize on Zomato’s strong momentum, the company’s inclusion in the SENSEX is likely to attract even more attention from institutional and retail investors alike. The QIP fundraise will further solidify the company’s financial foundation, enabling it to pursue growth initiatives across its business segments, from food delivery to new verticals like movie ticketing and event management.
Zomato’s impressive performance in 2024 serves as a testament to its adaptability and innovative approach in the highly competitive food-tech space. As the company continues to execute its growth plans, it remains an attractive option for investors who are looking for high-growth opportunities in the Indian market.
Conclusion: Zomato’s Bright Future
Zomato has undeniably had an extraordinary year, with its stock price hitting record highs and providing significant returns for investors. Its successful fundraising efforts, strong Q2 FY25 performance, and upcoming entry into the SENSEX index all point to a bright future for the company.
As Zomato continues to expand its business and strengthen its balance sheet, it remains a key player in the rapidly evolving food delivery and tech landscape in India. For investors, Zomato represents an exciting growth story that is set to continue well into the future. However, as with any investment, it is important to stay informed and monitor the company’s progress closely to make the most of potential opportunities.