Zomato Stock Sees Breakout: Analysts Predict Up to 18% Upside Potential

Zomato, one of India’s leading food delivery platforms, has caught the attention of investors recently with a significant rally in its share price. Over the past week, Zomato’s stock has jumped more than 7%, and in the last three months, it has surged by over 50%. This impressive performance has led to a technical breakout from its previous consolidation phase, and market analysts expect this upward trend to continue in the medium term.

Zomato Stock Performance: A Strong Surge

On Friday, Zomato’s stock reached a record high of ₹286.50 per share during early trading sessions, marking its seventh consecutive session of gains. However, after hitting these highs, the stock witnessed some cooling off, dropping over 2%. Despite this minor decline, the overall trend for Zomato shares remains strong, especially in light of its recent breakout from the consolidation zone.

This rally has sparked interest among technical analysts, who now believe Zomato’s share price is poised to continue its upward momentum. According to Axis Securities, Zomato has shown a robust breakout above the consolidation range of ₹280 to ₹249. This breakout, confirmed by a strong bullish candle on the weekly chart, indicates the continuation of a medium-term uptrend.

Technical Analysis: What’s Driving the Rally?

The recent technical analysis of Zomato’s stock provides some valuable insights into its potential future movement. According to Axis Securities, Zomato’s stock has been forming higher highs and higher lows on its weekly chart. It has also maintained a position above a medium-term upward sloping trendline, which is a clear indicator of a sustained uptrend.

Moreover, the stock is currently holding above the 23% Fibonacci retracement level from its rally between ₹146 and ₹279. This retracement level suggests a medium-term support zone near ₹249, reinforcing the idea that Zomato shares may find stability in this range if any short-term corrections occur.

Additionally, the Relative Strength Index (RSI), a key technical indicator, has crossed above its reference line, generating a strong buy signal. The RSI’s movement, coupled with the consolidation breakout, indicates that Zomato shares are likely to continue their medium-term uptrend. Axis Securities has set price targets for Zomato between ₹314 and ₹325, predicting potential gains of 14% to 18%.

Analyst Recommendations: Buy on Dips

Given the current technical setup, Axis Securities recommends buying Zomato shares within the range of ₹278 to ₹272, with a target price of ₹314 to ₹325. This price target suggests a potential upside of up to 18% from current levels. However, investors should be cautious, as a trend reversal could occur if the stock falls below the ₹256 level.

Zomato’s Long-Term Growth Prospects

Zomato’s strong stock performance is not just driven by technical factors; its fundamentals and growth potential also play a significant role. Foreign brokerage firm Bernstein has recently reaffirmed its ‘Outperform’ rating on Zomato, raising its target price to ₹330 per share from an earlier target of ₹275. This new target reflects a potential upside of more than 16% from Zomato’s closing price on Thursday.

Bernstein’s optimistic outlook on Zomato is largely tied to the company’s role in the burgeoning quick commerce (QC) sector. The brokerage firm believes that Zomato is well-positioned to capitalize on the rapid growth of this sector, prioritizing long-term growth and market leadership over immediate profitability.

Zomato’s Impressive Returns

Zomato’s stock has delivered remarkable returns over the past year. Year-to-date (YTD), the company’s shares have provided a multibagger return of 125%. Over the past 12 months, Zomato has delivered even more impressive gains of more than 183%. This stellar performance has cemented Zomato’s position as a favorite among investors, especially in the tech and food delivery space.

Market Performance

As of Friday morning, Zomato shares were trading at ₹277.90 per share, down 2.11% from the previous session. While the stock experienced a slight pullback from its recent highs, the long-term outlook remains bullish. The ongoing trend suggests that Zomato may continue to perform well, particularly if it maintains support above key technical levels and continues to benefit from favorable market conditions.

What’s Next for Zomato?

Investors who are considering Zomato as part of their portfolio should closely watch the stock’s movement in the coming weeks. While the stock has shown strong upward momentum, it is essential to monitor key technical levels, such as the ₹256 support range, to ensure that the trend remains intact.

In the medium term, analysts believe that Zomato’s growth in the quick commerce sector and its ability to capture more market share will continue to drive its stock price higher. Additionally, the broader market sentiment around technology stocks and the food delivery industry will play a crucial role in determining Zomato’s future performance.

Conclusion: A Breakout Stock with Potential

Zomato’s recent technical breakout and strong price performance make it a stock to watch in the coming months. With a solid support base around ₹249 and price targets set between ₹314 and ₹330, Zomato has the potential to deliver significant returns for investors. However, as with any investment, it’s essential to stay informed and monitor both the technical and fundamental aspects of the stock.

The company's strong position in the quick commerce market and its long-term growth prospects make it a compelling investment option for those looking to capitalize on the fast-growing food delivery industry. As always, investors should consult with certified financial experts before making any investment decisions.

Disclaimer: The views and recommendations mentioned in this article are those of individual analysts and brokerage firms. Investors are advised to do their own research and consult with financial experts before making any investment decisions.