Zomato Q3 Results: Mixed Earnings and What Experts Recommend

Zomato shares surge as Q3 results show mixed profits and increased revenue. Experts weigh in on investment options as the company addresses demand slowdown.

zomato shares in focus after q3 pat falls 57 yoy should you buy sell or hold

Zomato’s shares are in the spotlight on Tuesday, January 21, as the food delivery company shared some mixed news. They reported a net profit of Rs 59 crore for the December quarter. This is a big drop of 57% compared to last year when they made Rs 138 crore. However, their revenue from operations increased to Rs 5,405 crore, a growth of 64% compared to Rs 3,288 crore from the same time last year.

When we compare this quarter with the previous one, Zomato’s profit decreased by 66% from Rs 176 crore in the quarter before. But, they did see a 13% increase in revenue from the July to September quarter, which stood at Rs 4,799 crore. Also, Zomato’s total gross order value (GOV) from their B2C business grew by 57% year-over-year to Rs 20,206 crore.

In a letter to its shareholders, Zomato mentioned that they are currently facing a slowdown in demand that started in the second half of November.

What do experts say about investing in Zomato?

– UBS: They kept their ‘Buy’ rating and set a target price of Rs 320. Even though there has been a slowdown in food delivery, they noticed better profit margins. Zomato is also speeding up the rollout of their dark stores, aiming for 2,000 stores by December 2025, a year earlier than planned.

– Nomura: They also maintained a ‘Buy’ rating but lowered their target price to Rs 290 from Rs 320. They highlighted challenges in short-term profits, even though the Quick Commerce segment is showing unexpected profits. They believe Zomato has a strong balance sheet and good execution.

– Macquarie: They gave Zomato an ‘Underperform’ rating with a target price of Rs 130. They believe there is strong competition affecting profits and Blinkit (a part of Zomato) will take longer to become profitable. They expect a slight decrease in food delivery.

– BofA: They reiterated their ‘Buy’ rating with a target price of Rs 375. Despite the Q3 numbers missing some expectations, they believe Blinkit will grow significantly in profit, even if losses might continue for a couple of quarters. They expect food revenue growth to rise 17%, which was less than forecasted.

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