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Informist, Tuesday, Jan. 21, 2025

By Anjana Therese Antony

MUMBAI – There were aggressive bearish bets in the derivatives chain of Zomato for the second consecutive day after the company not only failed to meet the Street's expectations of its December quarter bottom line, but also saw a whopping 57% on-year decline. To add to the woes was the management's comment that its quick commerce platform Blinkit's operating loss may continue for the next one or two quarters. Many broking firms reduced their target prices for the stock, though they retained their bullish ratings. While premiums on deep out-of-the-money call options of Zomato expiring Jan. 30 nosedived, those on put options almost doubled, hinting at near-term downside for the stock.

The stock closed 10.5% lower at INR 214.55 on the National Stock Exchange on Tuesday as the second-biggest laggard in the Nifty 200 index after hitting its near six-month low of INR 207.80, losing INR 243.19 billion in market capitalisation. The stock has fallen 12% from its pre-results level as well as 30% from its record high of INR 304.70 hit on Dec. 9. The volume of the stock traded also rose 200% from the previous session to 308.22 million. Zomato released its earnings during market hours Monday and had closed 3.6% lower at INR 239.75. 

In the options chain of Zomato, premiums on INR 220-310 call contracts declined 57-73%, while those on INR 210-190 put options increased 28-148%. The maximum open interest addition was at the INR 230 call and INR 210 put strikes. The futures contract of Zomato also hinted at the near-term weakness for the stock and open interest rose 18% to 162.86 million. The contract closed 10.7% lower at INR 216.

Elara Securities reduced its earnings-per-share estimates for 2025-26 (Apr-Mar) by 8.9% and for FY27 by 5.4% due to rapid expansion and delayed profitability in the quick commerce segment under Blinkit. The broking firm maintained its 'buy' rating on the stock. The Haryana-based company said Blinkit's operational loss may continue for the next one or two quarters due to new store additions. The segment's operational loss, calculated as earnings before interest, tax, depreciation, and amortisation loss, during the December quarter expanded to INR 1.03 billion from a loss of INR 890 million a year ago. "While near term uncertainties in Blinkit's profitability trend may lead to pressures in the stock, we strongly suggest long-term investors to use the opportunity to build sizable positions," JM Financial Institutional Securities said in its post-earnings report. 

For the December quarter, the company posted a 57% on-year fall in consolidated net profit at INR 590 million, falling short of analysts' estimate of INR 2.44 billion by a significant margin. Its revenue rose 12.6% to INR 54.05 billion, also missing the Street's expectation of INR 54.43 billion. 

The overall equity market is also likely to see near-term downside pressure amid continuous selling by foreign investors, expensive valuations, and lacklustre earnings adding to the woes, analysts said. Donald Trump took charge as the 47th president of the US on Monday and imposed 25% tariff on Canada and Mexico, citing illegal immigration concerns. A research analyst at a domestic broking firm said that Trump's policies to boost the US economy might push inflation higher in the coming quarters and also hit other economies, including India. Indian equities underperformed many global markets and saw sharp losses.

Benchmark indices hit over seven-month lows Tuesday and closed sharply lower, with foreign investors expected to have offloaded significantly. The Nifty 50 closed 1.4% lower at 23024.65 points and the Sensex ended down 1.6% at 75838.36 points. Near-term support for the 50-stock index is pegged at 22800-22700 points and resistance at 23400-23500 points, according to a senior technical and derivatives analyst at a domestic broking firm said.

Premiums on 23000-23500 strikes of Nifty 50 call options expiring Thursday declined 58-83% and those on 22800-22550 put options increased 33-115%. The highest addition of open interest was at the 23500-point call and 22400-point put contracts. Traders also added short bets in the futures segment of the Nifty 50, where the January series closed 1.3% lower at 23105.10 points and open interest rose 3.7% to 14.66 million. 

--Nifty 50 Jan closed at 23105.10, down 295.10 points; 80.45-point premium to spot index

--Nifty 50 Feb closed at 23242.85, down 291.45 points; 218.20-point premium to spot index

--Nifty 50 Mar closed at 23400.00, down 287.20 points; 375.35-point premium to spot index

Dixon Technologies India, HDFC Bank, Reliance Industries, ICICI Bank, Zomato, Axis Bank, State Bank of India, Infosys, Kotak Mahindra Bank, Hindustan Aeronautics, Multi Commodity Exchange, Bharti Airtel, Tata Motors, Oberoi Realty, and Trent were the most actively traded underlying stocks Friday. End

Edited by Avishek Dutta

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