Shares of food delivery giant Zomato soared to a new 52-week high of INR 105.9 ($1 = INR 83.16) on Tuesday, marking an intraday increase of 4.3% on the BSE. The surge followed the company's announcement of the liquidation of its wholly owned subsidiary, Zomato Chile SpA (“ZM Chile”), on September 30 after trading hours.
Zomato has been shutting down several of its international subsidiaries in recent months, and stated that the closure of ZM Chile will not affect its revenue. This move appears to be part of the company's aggressive strategy to achieve profitability, which it successfully accomplished in Q1 FY24.
The company's shares have been on a bullish trend since April this year, with a year-to-date increase of 77.4%. Over the last six months, Zomato's shares have gained over 100%. Despite a significant drop of nearly 65% from its listing price in 2022, the stock is now trading just 8% below its listing price of INR 115.
Tuesday's trading session ended with Zomato shares closing 3.7% higher at INR 105.3 on the BSE. This level was last seen at the end of January 2022.
Zomato has been introducing multiple new features on its platform in an effort to boost its revenue. According to Kotak Institutional Equities, the company's decision to charge a platform fee of INR 2 to INR 3 per food delivery order could enhance its customer take rate and contribution margin. Bernstein also noted last month that Zomato is "raising the profitability bar" and could deliver long-term, high-teens growth in food delivery with continued improvement to contribution margins.
In other market news from Tuesday, other new-age tech stocks also saw gains amid consolidation in the larger domestic equity market. CarTrade Technologies and MapmyIndia jumped over 6% each, while Paytm gained around 2% and EaseMyTrip rose 3.7%. However, benchmark indices Nifty 50 and Sensex fell 0.56% to 19,528.75 and 0.48% to 65,512.1 respectively.
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