Zomato, one of the leading food delivery platforms in India, has posted impressive Q1 FY2024 results, marking a critical turn towards profitability. Here’s an analysis of the figures and what they signify for the company:
Profitability
For the first time, Zomato reported a consolidated net profit of Rs 2 crore for the quarter ended June 2023, in stark contrast to a loss of Rs 186 crore in the corresponding quarter of the last financial year. The company’s quick commerce business, Blinkit, turned contributive positive in June 2023, significantly aiding this turnaround.
Revenue Growth
Zomato’s revenue from operations soared by almost 71% YoY, standing at Rs 2,416 crore, compared to Rs 1,414 crore in the year-ago period. The adjusted revenue (excluding quick commerce business) was up by 33% YoY, indicating a robust core growth in the food delivery segment.
Operational Highlights
The company’s gross order value (GOV) jumped to Rs 7,318 crore, driven by a robust increase in order numbers and a modest rise in the average order value. The Gold program, contributing to over 30% of GOV in the food delivery business, played a vital role in this growth.
Market Response
Following the announcement of the earnings during market hours, Zomato’s stock price jumped over 2% on the NSE, reflecting positive investor sentiment. However, shares of Zomato fluctuated before the results, dipping by about 5% to Rs 80.99 before recovering to Rs 84.17.
Future Outlook
Deepinder Goyal, Managing Director and CEO, expressed confidence in the strategic decisions and hinted at a significant shift in the business trajectory. CFO Akshant Goyal projected that the business would remain profitable going forward and continue to deliver 40%+ YoY topline growth for at least the next couple of years.
Analysts’ Perspective
Leading brokerage firms had anticipated positive results, with Kotak Institutional Equities estimating Zomato’s revenue at Rs 2,267 crore for the quarter. ICICI Securities and JM Financial also foresaw substantial growth in both revenue and margins.
Challenges and Opportunities
Despite positive figures, the company faced some temporary disruptions in its Blinkit business due to changes in the delivery partner payout structure. However, the overall growth in different segments and promising initiatives like Gold membership highlight a trajectory that seems inclined towards consistent growth.
Also read: Zomato share price target 2025: Have I invested?
Conclusion
Zomato’s Q1 FY2024 results indicate a significant milestone in the company’s journey towards sustainable profitability. The numbers reveal not only a sharp turnaround from previous losses but also a strategic vision that seems to be working in the company’s favor. The diversified growth in both the core food delivery business and new segments like Blinkit shows a promising future for Zomato. The management’s commitment to simplifying the business and taking calculated risks is bearing fruit, setting an optimistic tone for the coming quarters.
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