Zomato Receives 'Hold' Rating After Positive Results

Zomato, a leading IT software company in the largecap industry, has recently received a 'Hold' rating from MarketsMOJO. This upgrade comes after the company declared very positive results in September 2023, with a growth in net profit of 1700%. This marks the eighth consecutive quarter of positive results for Zomato.
One of the key factors contributing to the 'Hold' rating is the company's strong financial performance. Zomato's net sales for the quarter were at a record high of Rs 2,848.00 crore, while its PBDIT was at -47.00 crore. The operating profit to net sales ratio was also at its highest at -1.65%. Additionally, the stock is currently in a bullish range and the technical trend has improved from mildly bullish to bullish on 13-Dec-23.

Another positive aspect for Zomato is its high institutional holdings at 67.76%. These investors have better resources and capabilities to analyze the fundamentals of companies, making their stake increase by 3.41% over the previous quarter. The stock has also outperformed the market (BSE 500) with a return of 85.76% in the last year.

However, there are some concerns regarding the company's long-term fundamental strength. With operating losses and a weak growth rate of 9.43% over the last 5 years, Zomato's ability to service its debt is also weak with a poor EBIT to interest ratio of -86.82. Additionally, the stock is currently trading at a risky level compared to its historical valuations.

In conclusion, while Zomato has shown strong financial performance and a positive market performance, there are some concerns regarding its long-term fundamentals and current valuation. Investors should carefully consider these factors before making any investment decisions.