Zomato’s stock price has been under pressure since the morning. Zomato’s share price fell Wednesday, reaching an intraday low of Rs 61.50 per share, down 5.20 percent from its Monday close of Rs 64.90 per share on the NSE.
ONDC a Threat To Zomato, Swiggy?
The Indian government-created ONDC (Open Network for Digital Commerce), which allows businesses to sell food straight to consumers without the need for a third party, appears to be giving private rivals Swiggy and Zomato a run for their money.
Screenshots comparing food products on Zomato and ONDC have gone viral on social media. A simple Margherita pizza costs Rs 195 on Zomato and Rs 156 on ONDC, which is nearly 20% less. Non-vegetarians would have to pay Rs 280 on Zomato for a McChicken Burger, but only Rs 109 on ONDC.
Stock Price History
On July 23, 2021, Zomato stock was launched on the markets. The initial public offering (IPO) was priced at Rs 76 per share.
The company has underperformed the benchmark Nifty by 3.6% over the previous year, compared to an 11% increase in the 50-stock index during the same period.
The stock has been very volatile, with a 1-year beta of 1.54, according to Trendlyne data.
This stock’s 52-week high is Rs 79.80 and its 52-week low is Rs 40.60.
What Experts Say?
With ONDC becoming a potential threat to Zomato and Swiggy’s market share, Zomato’s shares have dropped more than 5% in trading, according to experts.
As restaurants transition to ONDC, Karan Taurani of Elara Capital feels that rising commission rates may be difficult for Zomato in the short future, which is a significant driver for their profitability forecast.
“ONDC bodes well regarding food as a product with a lower average order value when compared to e-commerce and white goods, where trust issues exist,” Taurani continued.
However, ONDC will face a difficult road to customer acceptance. Some ONDC consumers complained about stale food and lengthier delivery times, which exceeded 90 minutes in some cases.
Taurani further indicated that concerns about Zomato or Swiggy‘s declining market share will be put to rest if ONDC’s user experience improves over time. “Right now, it’s very bad,” he remarked.
Zomato and Swiggy’s struggle with ODNC will very definitely be stretched out as they seek a way to profitability. For the time being, investors are focused on Zomato’s Q4 results, which have yet to be released.
Should You Buy Zomato Stocks?
In response to why Zomato’s share price is plummeting today, Ravi Singhal, CEO of GCL Broking, stated, “Recently, Invesco has reduced Swiggy valuations from $8.2 billion to $5.5 billion.” Because Invesco’s market valuation approach also applies to Zomato, the market has turned bearish on Zomato.”
Sumeet Bagadia, Executive Director at Choice Broking, commented on pivot levels for Zomato shares, saying, “Zomato share price is currently in the 58 to 70 range and it may go up to 52 apiece levels if this 58 support is broken.”
“From a fundamental standpoint, Zomato is expected to emerge from the base construction mode, and the stock may show a significant upside move in the next one to two quarters,” Ravi Singhal of GCL Broking said, recommending a ‘buy on dips’ approach to those who believe in bottom fishing. So, this is the opportunity for medium to long-term investors to begin acquiring Zomato shares for the medium to long term.”
Sumeet Bagadia recommended positional investors to wait for a little longer since the stock appears weak on the chart. He stated that the optimum purchasing zone for the stock would be at its next support level and encouraged investors to wait for further decline.