Zomato's stock demonstrated resilience today, with a modest uptick to Rs 117.30, following a buy recommendation from Citi setting a target price of Rs 145. This positive outlook from Citi comes in the wake of a tumultuous period for the food delivery company, which saw its shares dip over seven percent post-World Cup, triggered by Alipay Singapore Holdings' exit.
The sell-off by Alipay Singapore Holdings involved offloading their entire stake of 29,60,73,993 shares through open market transactions at an average price of Rs 112.70 per share, totaling Rs 3,336.75 crore. Despite this significant transaction, Zomato's stock managed to close positively at Rs 117.30 on Wednesday, November 29.
In a contrasting move to Alipay's exit, Morgan Stanley (NYSE:MS) Asia (Singapore) Pte demonstrated confidence in Zomato by acquiring a new stake in the company. The details of this acquisition align with the price point of Alipay's sale, signaling a potential shift in the investor landscape for Zomato.
Amidst these developments, there's growing concern over the potential implementation of GST penalties that could increase costs for Zomato's non-Gold orders by Rs 5 each. This change may inadvertently boost customer loyalty, as it could encourage more users to join Zomato's Gold program to avoid the additional charges.
InvestingPro Insights
In light of Zomato's recent market activity, certain metrics from InvestingPro provide additional context for investors considering the company's stock. Notably, Zomato has been experiencing accelerating revenue growth, which aligns with the positive sentiment from Citi's buy recommendation. This growth is a testament to Zomato's potential to expand its market share in the competitive food delivery industry. Additionally, the company holds more cash than debt on its balance sheet, a reassuring sign of financial stability amidst market fluctuations.
InvestingPro Tips indicate that analysts are expecting sales growth in the current year, which may further bolster investor confidence following Morgan Stanley's stake acquisition. Moreover, Zomato's impressive gross profit margins could be a key factor in its ability to navigate the proposed GST penalties on non-Gold orders.
For those interested in a deeper analysis, InvestingPro offers an array of additional tips; in fact, there are 15 more InvestingPro Tips available for Zomato, which can be accessed through an InvestingPro subscription. Currently, there's a special Cyber Monday sale with a discount of up to 55% off. Plus, use coupon code sfy23 to get an additional 10% off a 2-year InvestingPro+ subscription, offering valuable insights for savvy investors looking to make informed decisions.
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