Mutual Funds Increase Bets on Zomato as Shares Surge
Mutual funds have significantly increased their investments in Zomato, the online food delivery platform, after its impressive rally in the past six months. In August, domestic fund houses purchased over 80 million shares of Zomato, a 30% increase compared to the previous month. Currently, mutual funds hold 789 million shares in the company, valued at Rs 7,700 crore.
Top Picks by Fund Houses
Zomato was among the top additions for three consecutive months, along with companies like Hindustan Unilever (HUL) and Nestle India. Axis Mutual Fund, Franklin Templeton Mutual Fund, and JM Mutual Fund all favored Zomato as one of their top picks in August. Axis MF invested Rs 226 crore, while Franklin and JM MFs purchased stocks worth Rs 73 lakh and Rs 15 lakh respectively.
Performance and Growth Prospects
Zomato has outperformed its peers in the new-age sector this year, with a 96% rally in its stock price over the past six months. The company’s strong financial performance in the last two quarters and promising growth prospects have contributed to this price gain. Zomato reported a surprise net profit of Rs 2 crore for the June quarter, compared to a loss of Rs 186 crore a year ago. Analysts attribute these strong earnings to healthy revenue growth and improved margins.
Analysts expect Zomato to break even within the next four quarters due to wallet share gains. Sneha Poddar of Motilal Oswal Financial Services predicts a 25% compound annual growth rate (CAGR) in revenue for Zomato’s food delivery business over the next two years. Poddar has a “buy” rating on the stock with a price target of Rs 125. The consensus estimate also suggests an upside of 26% from current levels.
Hot Take: Zomato’s Strong Performance and Investor Recommendations
Zomato’s impressive rally in the stock market has caught the attention of mutual funds, leading to increased investments in the company. With strong financial results, promising growth prospects, and positive analyst recommendations, Zomato seems to be an attractive investment option for investors looking to capitalize on the online food delivery sector’s potential.
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