Shares of Zomato Ltd hit a fresh one-year high with the stock surging nearly 53 percent in the last two months. The stock trades above its issue price of Rs 76 a share.

The stock hit a high of Rs 77.35 a share – a level last seen on April 26, 2022. At 1pm, the stock was trading at Rs 77 on the BSE, up 1.64 percent from its previous close. The stock has gained nearly 53 percent since March. It is still down 52 percent from its record closing high of Rs 160.30 hit on November 15, 2021.

Investors are buying the stock because of a series of positive factors like improvement in earnings and recent addition of the stock by Chris Woods of Jefferies in its long portfolio to two of his long-only portfolios, assigning a weight of 4 percent each.

The firm had earlier reported a narrower loss in the March quarter which analysts viewed positively. Net loss of Zomato narrowed to Rs 188 crore from Rs 360 crore a year ago and Rs 345 crore a quarter ago. Consolidated revenue for Zomato increased a whopping 70 percent on-year to Rs 2,056 crore.

According to Jefferies, the improvement in profitability will be primarily driven by margin expansion in the food sector and a reduction in losses for Blinkit. Despite challenging macroeconomic conditions that presented growth obstacles, the management demonstrated a sense of urgency in improving profitability, even with the launch of the Gold program.

Jefferies also notes that “green shoots” of positive progress are visible, and in the first quarter, the gross order value is expected to increase by a high single-digit percentage, which is seen as a positive development.

The recent news on MSCI weight addition on Zomato and the revision of incentives and discounts at ONDC also boosted sentiments among investors. The firm recently saw  an addition to its weight in the MSCI index which is likely to trigger inflows of $59 million and an addition of 77 million shares.

Open Network for Digital Commerce (ONDC) has made revisions to its incentive scheme for network participants in an effort to decrease reliance on discounts for fostering adoption. This move has largely addressed concerns regarding the network’s ability to break the duopoly of Zomato and Swiggy. As a result of reduced incentives, the daily order values on ONDC have witnessed a significant decline of approximately 64 percent, now standing at 9,000 compared to the peak levels.

The adjustments made by ONDC come in response to growing observations from internet analysts who have emphasized that the initial volumes of food delivery on the platform were unsustainable.

Shares of Zomato Ltd hit a fresh one-year high with the stock surging nearly 53 percent in the last two months. The stock trades above its issue price of Rs 76 a share.

The stock hit a high of Rs 77.35 a share – a level last seen on April 26, 2022. At 1pm, the stock was trading at Rs 77 on the BSE, up 1.64 percent from its previous close. The stock has gained nearly 53 percent since March. It is still down 52 percent from its record closing high of Rs 160.30 hit on November 15, 2021.

Investors are buying the stock because of a series of positive factors like improvement in earnings and recent addition of the stock by Chris Woods of Jefferies in its long portfolio to two of his long-only portfolios, assigning a weight of 4 percent each.

The firm had earlier reported a narrower loss in the March quarter which analysts viewed positively. Net loss of Zomato narrowed to Rs 188 crore from Rs 360 crore a year ago and Rs 345 crore a quarter ago. Consolidated revenue for Zomato increased a whopping 70 percent on-year to Rs 2,056 crore.

According to Jefferies, the improvement in profitability will be primarily driven by margin expansion in the food sector and a reduction in losses for Blinkit. Despite challenging macroeconomic conditions that presented growth obstacles, the management demonstrated a sense of urgency in improving profitability, even with the launch of the Gold program.

Jefferies also notes that “green shoots” of positive progress are visible, and in the first quarter, the gross order value is expected to increase by a high single-digit percentage, which is seen as a positive development.

The recent news on MSCI weight addition on Zomato and the revision of incentives and discounts at ONDC also boosted sentiments among investors. The firm recently saw  an addition to its weight in the MSCI index which is likely to trigger inflows of $59 million and an addition of 77 million shares.

Open Network for Digital Commerce (ONDC) has made revisions to its incentive scheme for network participants in an effort to decrease reliance on discounts for fostering adoption. This move has largely addressed concerns regarding the network’s ability to break the duopoly of Zomato and Swiggy. As a result of reduced incentives, the daily order values on ONDC have witnessed a significant decline of approximately 64 percent, now standing at 9,000 compared to the peak levels.

The adjustments made by ONDC come in response to growing observations from internet analysts who have emphasized that the initial volumes of food delivery on the platform were unsustainable.