Zomato Shares Surge to 52-Week High After IRCTC Partnership

Zomato's share price reached a 52-week high of ₹115 on the morning of October 18. This rise came after the company partnered with the Indian Railway Catering & Tourism Corp (IRCTC). Zomato and IRCTC have joined forces to provide preordered meals through IRCTC's online catering portal. This partnership starts as a Proof of Concept (PoC) at five railway stations: New Delhi, Prayagraj, Varanasi, Kanpur, and Lucknow.

In September, the company entered into an agreement with the Maharashtra State Road Transport Corporation (MSRTC) to facilitate MSRTC's online bus booking services through IRCTC's bus booking portal/website. In preparation for the upcoming festivities, IRCTC is introducing special services and offers for its passengers. IRCTC's catering arm is set to offer Navratri thalis to cater to the demand of fasting passengers.

Zomato's Stock Performance

Zomato's stock has been on the rise, reaching a 52-week high for the second consecutive day. On October 18, it reached ₹115. Over the past month, the stock has risen by 12%. Its recent performance shows a 111.91% increase over the last six months, while the Nifty 50 benchmark saw a 12.29% increase during the same period.

One of the primary reasons for Zomato's remarkable stock performance is the increased stake of foreign entities (FIIs) and domestic entities (DIIs) in the last quarter.

FIIs increased their stake to 54.7% in Q2FY24 from 54.4% in the previous quarter.
DIIs also showed more interest in Zomato, increasing their stake to 13% in Q2FY24 from 9.9% in Q1FY24.

Q1 Performance & Platform Fee Increase

Zomato achieved profitability for the first time in the June 2023 quarter and reported a consolidated profit after tax of ₹2 crores, a turnaround from the ₹186 crore loss in the same period the previous year. Additionally, Zomato saw a remarkable 71% year-on-year growth in revenue from operations, reaching ₹2,416 crore in Q1FY24, up from ₹1,414 crore in the corresponding period the prior year.

In August, Zomato introduced a platform fee of ₹2 per order for select users, with an increase to ₹3 per order in certain tier-II cities. This will impact Zomato Gold subscribers also, who were previously exempt from such fees. Zomato believes that this platform fee strategy has the potential to enhance profitability. Zomato's results for the September quarter have not been released yet.

August Block Deal

In August, Tiger Global, a prominent US-based investment firm, sold its entire stake in Zomato, totaling ₹1,123.85 crore. This sale included about 12.35 crore shares at an average price of ₹91.01 per share. DST Global, through Apolleto Asia Ltd, also participated in the sale, divesting about 3.2 crore Zomato shares for ₹288 crore at an average price of ₹90.10 per share.

Final words

Zomato's stock has surged to a 52-week high following its collaboration with IRCTC to deliver pre-ordered meals at railway stations. This rise in Zomato's stock price is attributed to increased interest from foreign and domestic investors. Meanwhile, IRCTC is gearing up to offer special Navratri thalis for passengers during the festive season.