News

Published: August 5, 2023
Updated: August 5, 2023

"Zomato Achieves Profitability Milestone, Stock Surges 14% in a Bullish Market"

Shares of Zomato witnessed a remarkable surge of 14% to reach an 18-month high at Rs 98.39 on the BSE, fueled by heavy trading volumes. The food aggregator platform achieved a significant milestone by turning profitable for the first time in the first quarter of 2023-24 (Q1FY24). This achievement has boosted investor confidence, and the stock has rebounded impressively, marking a 122% rise from its all-time low earlier in the year.

Zomato Reports Profit and Revenue Growth:

Zomato reported a consolidated profit after tax of Rs 2 crore in Q1FY24, a substantial improvement compared to a loss of Rs 186 crore in the same period last year. This impressive performance was driven by a 71% year-on-year growth in revenue from operations, which reached Rs 2,416 crore in Q1FY24, up from Rs 1,414 crore in the corresponding period in the previous year.

Robust Growth in Food Delivery Business:

The company's revenue growth was primarily led by its food delivery business, which experienced a significant 17% quarter-on-quarter (QoQ) increase. Despite muted growth in Blinkit during April-May due to disruptions, the management expects a reversal and 20% QoQ growth in the July-September or Q2 quarter.

Positive EBITDA and Upbeat Growth Guidance:

Zomato's adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), including its quick commerce business Blinkit, turned positive for the first time ever at Rs 12 crore. This is a notable improvement compared to the loss of Rs 175 crore in the previous quarter (Q4FY23). The management has provided an optimistic outlook with strong growth guidance of 40% and 60% plus for Zomato (consolidated)/Blinkit over the next few years.

Encouraging Signs for Sustained Revenue Stream:

The company's success in cross-selling ads to restaurants resulted in an 80 bps QoQ increase in take rate in food delivery. This signifies a more sustainable revenue stream rather than relying solely on an increase in take rate.

Promising Future and Bullish Market Sentiment:

The food delivery business in India still has a vast potential for growth, and with Zomato's dominant market share and strong growth in the food delivery and Hyperpure verticals, the company appears well-positioned for future success.

Zomato's achievement of turning profitable for the first time has ignited a bullish market sentiment, propelling the stock to an 18-month high. The company's strong all-round performance and promising growth prospects in the food delivery and quick commerce verticals have instilled confidence in investors and analysts alike. With a positive bias in the stock's price action and optimistic growth projections, Zomato's future looks promising, and it aims to further solidify its profitability in the coming quarters.