In Wednesday’s trading, shares of the food delivery giant Zomato faced a notable setback, plummeting by 6% during the opening trade. This decline followed the company’s disclosure of its Q4 results earlier in the week. Zomato’s share price experienced a sharp drop of 6.27%, hitting an intraday low of Rs 182.10 on the NSE.
In the fourth quarter of FY24, the food delivery platform Zomato reported a consolidated net profit of Rs 175 crore, a significant turnaround from the Rs 188 crore loss recorded in the same period a year ago. Notably, the net profit exhibited a notable 27% growth from the Rs 138 crore reported in the December quarter.
Zomato’s revenue from operations in Q4FY24 surged impressively by 73%, reaching Rs 3,562 crore compared to Rs 2,056 crore in the previous year, showcasing robust growth year-on-year. The Gross Order Value (GOV) for the March quarter also saw a substantial increase, rising by 51% year-on-year to Rs 13,536 crore across its B2C businesses.
Operationally, the company demonstrated improvement, posting an EBITDA of Rs 86 crore, a significant advancement from the Rs 226 crore loss incurred during the corresponding period last year.
Furthermore, Zomato’s quick commerce arm, Blinkit, achieved operational EBITDA break-even in March 2024, marking a milestone in its operational performance.
Brokerages on Zomato
Nuvama on Zomato
Nuvama Institutional Equities reaffirmed a ‘Buy’ rating on Zomato shares and raised the target price to Rs 245 per share, up from Rs 180 previously. This upward revision reflects confidence in Zomato’s prospects, particularly driven by the robust performance and potential of its quick commerce segment.
According to a report by Nuvama Institutional Equities, Blinkit, Zomato’s quick commerce arm, intends to bolster its dark store count from 525 in Q4FY24 to 1000 by the end of FY25. While this expansion is expected to impact short-term profitability, it is anticipated to solidify Blinkit’s position as the leading player in quick commerce.
The report values Zomato using Sum of the Parts (SOTP), estimating the food delivery segment at $10 billion and Blinkit at $13 billion. The upgrade in valuation is attributed to Blinkit’s accelerated growth and clear dominance in the quick commerce sector.
Elara Capital on Zomato
Elara Capital, in its recent analysis of Zomato, reiterated its favorable stance on the company, citing its strong foothold in the food industry. The firm anticipates Zomato to sustain an adjusted EBITDA Compound Annual Growth Rate (CAGR) of 47% in the fiscal years 2024 to 2026.
Elara Capital highlighted the superior performance of Zomato’s quick commerce arm, Blinkit, attributing its market leadership position to excellent execution and enhanced customer experience, particularly in terms of on-time delivery and product variety.
The brokerage firm revised its consolidated revenue estimates upward by 22% for FY25E and 33% for FY26E, driven primarily by robust growth projections for Blinkit and Hyperpure.
However, Elara Capital’s optimism is tempered by a modest earnings upgrade of 7% for FY25E and 3% for FY26E, primarily due to higher ESOP charges and lower EBITDA for Blinkit, reflecting the latter’s strategic focus on expansion.
Despite these considerations, the brokerage firm upheld its ‘Buy’ rating on Zomato shares and raised the target price to Rs 280 per share from Rs 250 previously.
(Disclaimer: Views, recommendations, opinions expressed are personal and do not reflect the official position or policy of Financial Express Online. Readers are advised to consult qualified financial advisors before making any investment decisions. Reproducing this content without permission is prohibited.)