Zomato shares fall to lowest level in nearly six months. Should you use this opportunity?

Zomato shares suffered sharp losses on Wednesday, falling to their lowest levels recorded in almost the past six months. The Zomato stock fell by as much as Rs 7.8 or 14.9 per cent to Rs 44.4 apiece on BSE, coming within Rs 4 of an all-time low hit in July 2022.

At the intraday low, Zomato shares changed hands at a discount of 41.6 per cent to the upper end of its IPO price range.

Investors offloaded Zomato shares in large quantities.

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At 2 pm, the Zomato stock quoted lower by Rs 4.5 or 8.6 per cent at Rs 47.6 apiece. More than 136 lakh Zomato shares changed hands in intraday trade so far, as against a daily average of 36.3 lakh in the past two weeks, according to provisional exchange data.

The stock of the food-delivery aggregator lost one-fifth of its value in January 2023 so far.

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HSBC remains upbeat on Zomato shares. The slow industry and aggressive competition may impact the growth of the company in the October-December period but its profitability should continue to improve, according to the brokerage.

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It, however, added that high competitive intensity may restrict further profitability gains in 2023. "Growth acceleration is more critical anyway," HSBC said.

The company's grocery delivery subsidiary Blinkit business will continue to contribute more to the Zomato valuation in 2023, according to the brokerage.

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The brokerage maintained a 'buy' rating on the stock with a target price of Rs 87 per share, implying a 67 per cent upside from Tuesday's closing level.