Chart of the Day: Stock Gaps Up to ‘Break Trendline’, Gains 7%!
A mid-cap new-age business that almost always remains in the news is again making a buzz. Food delivery platform – Zomato Limited (NS:), having a market capitalization of INR 41,255 crores seems to be making an attempt to pare some of the recent losses.
On the financial front, the company is still loss-making with an FY22 loss of INR 1,208.7 crores, an uptick of 48.7% from the previous year’s loss of INR 812.8 crores. The company is struggling to hit profit even at the EBITDA level, however, the recent Q3 FY23 numbers from One 97 Communications (the parent company of Paytm (NS:)) have triggered a buying frenzy in most of the new-age businesses. It posted its first-ever quarterly operating profit, at INR 424 crores which has risen hopes from Zomato.
Image Description: Daily chart of Zomato with volume bars at the bottom
Image Source: Investing.com
The share price of Zomato jumped 3.35% in yesterday’s session, while another 6.48% rally to INR 52.55, by 12:06 PM IST is seen today. The stock opened Wednesday’s session with a noticeable gap up and surged past its falling trendline resistance in style. This is a very steep trendline which is depicting a sharp selloff in the recent past in Zomato shares.
However, today’s breakout seems to have changed this trend and the stock might start to head to the north. The company is yet to announce its Q3 FY23 earnings report which is due to be out tomorrow. Recently, Deepinder Goyal, CEO at Zomato tweeted “Sorry, a bit late to the party – was so busy working on our own profitability ;-)” while congratulating Vijay Sekhar of Paytm on achieving this milestone which has sent a message to the investing community that Zomato is also on its path to profitability at the operating level.
Although it is difficult to make a guess on the upcoming earnings, however, looking at the cumulative demand for Zomato shares in today’s session, the results might surprise the street which could also lead brokerages to upgrade their ratings on this counter, just as it was done with Paytm.
From a trading perspective, the stock might show a one-way move to the next resistance level of INR 61.5, depicting an upside potential of around 17% from the CMP. However, traders should also be cautious about tomorrow’s result which could play a spoiler to the bulls’ party.