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Zomato shares rose unexpectedly even after a 78% fall in Q4 profit. Discover what this means for investors and whether it's time to buy, hold, or sell.
Zomato Shares Climb Despite 78% Drop in Q4 Profit – Should You Buy, Hold, or Sell?
Zomato, one of India’s most prominent food delivery platforms, surprised the markets once again. Despite reporting a staggering 78% decline in Q4 profit, its shares continued to climb on the stock exchanges. The contradiction between financial results and investor behaviour has sparked widespread debate among analysts and retail investors alike. So, the big question is: should you buy, hold, or sell Zomato shares right now?
Understanding the Q4 Profit Dip
Zomato’s net profit fell by 78% in the fourth quarter compared to the previous quarter. Several factors contributed to this drop, including higher marketing expenses, investments in Blinkit (its quick-commerce arm), and continued expansion across new cities and categories. While these expenditures might seem worrying at first glance, they indicate a long-term growth strategy rather than short-term profitability.
Why Are Zomato Shares Rising Despite Poor Profits?
Here’s where things get interesting. The share price is not always a reflection of immediate profit. Instead, it’s a reflection of market sentiment, future potential, and investor confidence.
Zomato's revenue from operations showed healthy year-on-year growth, and the company is inching closer to EBITDA-level profitability. Many investors view the Q4 losses as temporary, especially given Zomato’s aggressive push in quick commerce, which is expected to dominate the Indian retail landscape in the coming years.
Analyst Reactions: Mixed But Leaning Positive
Several analysts are bullish on Zomato's long-term prospects, citing growth in order volumes, user base, and improved unit economics. However, some are cautious due to the high cash burn and uncertainty around the quick-commerce sector's profitability.
Brokerage firms have given mixed ratings, with some suggesting a ‘buy’ rating with a long-term horizon, while others recommend ‘hold’ until Zomato shows clearer signs of consistent profitability.
Should You Buy, Hold or Sell Zomato Shares?
Buy if:
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You believe in the long-term growth of India's digital and food delivery economy.
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You're confident in Zomato’s strategic focus on quick commerce and vertical expansion.
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You're comfortable with high volatility and can invest for 2–5 years.
Hold if:
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You've already invested and want to wait until Zomato turns consistently profitable.
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You're unsure about the short-term market reaction but trust its fundamentals.
Sell if:
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You’re risk-averse and prioritise short-term returns.
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You’re uncomfortable with continued losses and the uncertainty of quick-commerce profitability.
Conclusion: Zomato Is Playing the Long Game
While the 78% Q4 profit drop is undoubtedly alarming, the stock market often looks beyond the surface. Zomato’s ongoing investments could well be laying the groundwork for future dominance in both food delivery and quick commerce. For investors, the decision to buy, hold, or sell should be aligned with their risk appetite and investment horizon.
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