Zomato shares surge 6% to 6-week high as new-age stock set to enter BSE Sensex next month

Stock Market Today: Shares of Zomato, the food delivery aggregator, surged 6.35% in early morning trade on Monday, November 25 to their 6-week high of ₹273 apiece as the company is set to enter the BSE Sensex index, replacing JSW Steel. The company will become the first new-age tech stock to enter the 30-share frontline index.

Asia Index Private Ltd, a subsidiary of BSE, announced the reconstitution on Friday post-market hours. The changes will take effect on December 23, 2024, the Asia Index announced. Companies are added or removed from the Sensex based on their average six-month float-adjusted market capitalisation.

The BSE Sensex includes 30 large, well-established companies across key sectors, serving as both a benchmark and an investable index.

In another development, the company announced on Saturday that its shareholders have approved a proposal to raise capital through a qualified institutional placement. Last month, the board had approved a fundraise of up to ₹8,500 crore via this method to strengthen its cash balance following the recent acquisition of the movie and events ticketing businesses of digital payments firm Paytm.

Stock up 128% in 2024

Zomato has posted impressive stock price gains, with the company’s shares rallying 41% in the last six months and over 128% year-to-date (YTD). This growth has been driven by steady expansion in its core food delivery business and strong demand in its quick commerce division, Blinkit.

Additionally, several brokerages have raised their target prices for the stock, citing robust potential in both the food delivery and quick commerce sectors, which has also led to a sharp rise in the stock's value. Japanese brokerage firm Nomura noted in its latest report that the company’s growth has significant room to accelerate, raising its target price from ₹280 to ₹320 while maintaining a "buy" rating.

Given the low penetration levels and increasing market acceptance in India, Zomato's quick-commerce business is focusing on expanding store density in existing markets. The company plans to increase its store count by approximately 4X, aiming for 2,000 stores by December 2026, according to Nomura.

Earlier in September, global brokerage firm JP Morgan raised its target price for the stock from ₹208 to ₹340 per share, maintaining its "overweight" rating.

Looking at its financial performance, the company reported a consolidated net profit of ₹176 crore in Q2FY25, up from ₹36 crore in the same quarter last fiscal. Consolidated revenue from operations stood at ₹4,799 crore, compared to ₹2,848 crore in the year-ago period.

The company added 152 new "dark stores—distribution" centres—during the quarter, the highest number added in any single quarter, bringing the total store count to 791.

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