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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