Zomato shares had fallen some 13 per cent in July as its one-year lock-in period ended. This was in addition to some 28 per cent drop the scrip witnessed in June, amid weak sentiment for new age stocks globally due to inflationary concerns.
Mutual funds seemed to have found value in the stock, as the institutional category upped their stake in the new age company to 28,70,54,377 shares or 3.65 per cent in July — data compiled by Prime Database suggested — as the stock drifted to a record low of Rs 40.55 by July 27.
Data showed the mutual funds held 17,89,12,601 shares or a 2.71 per cent stake in Zomato as of June 30.
In value terms, MFs held Rs 1,343.41 crore worth of Zomato shares at the end of July against Rs 963.44 crore in June. Since July 27’s low, the scrip has risen a massive 61 per cent. This is till Wednesday’s intraday price of Rs 65.20.
A host of brokerages have shown faith in the stock of late.
In July, Credit Suisse maintained its ‘outperform’ rating on the stock, with a target of Rs 90. The brokerage said Zomato is on a clear road to profitability growth. It said that existing core customers would drive the food business.
Earlier, Jefferies said it remained bullish on the counter, as it felt that management has accelerated its journey towards better unit economics. It has a target price of Rs 100 on the stock.
The company also reported a narrowing of consolidated net loss at Rs 186 crore for the June quarter compared with Rs 359.70 crore in the March quarter and Rs 360.70 crore in the year-ago quarter.
Zomato’s consolidated revenue from operations surged 67.44 per cent YoY to Rs 1,413.90 crore for the quarter from Rs 844.40 crore in the corresponding quarter last year.
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