Zomato, the prominent food delivery and grocery platform, reported its Q2 results on October 22, 2024. The company showcased a remarkable year-on-year profit increase of 389%, reaching ₹176 crore for the quarter ending September 30. This significant growth reflects Zomato’s continued expansion in the competitive online food delivery market.
Main Points
Financial Highlights
- Net Profit: Zomato’s net profit soared to ₹176 crore, up from just ₹36 crore during the same period last year. However, this figure fell short of analysts’ expectations, which had projected a profit of approximately ₹270 crore.
- Revenue Growth: The company’s revenue surged by 68%, totaling ₹4,799 crore compared to ₹2,855 crore in Q2 of the previous fiscal year. This figure also exceeded analyst forecasts of around ₹4,730 crore.
- Adjusted EBITDA: Zomato’s adjusted EBITDA rose significantly to ₹331 crore from ₹41 crore in the same quarter last year, indicating improved operational efficiency and profitability.
Market Dynamics
Zomato’s impressive growth comes amid intense competition in India’s food delivery sector. Rivals like Swiggy are also expanding aggressively. To maintain its market position, Zomato is focusing on increasing its store count and enhancing service offerings. The company aims to grow its network to 2,000 stores by 2026, which is expected to bolster its quick commerce segment.
Segment Performance
- Food Delivery: The food delivery segment alone achieved an adjusted revenue growth of 21% year-on-year, amounting to ₹2,340 crore. The gross order value (GOV) for this segment increased by 21% to ₹9,690 crore.
- Quick Commerce: Zomato’s quick commerce business has been nearing break-even status, contributing positively to overall margins. This segment is crucial as it aligns with changing consumer preferences for faster delivery services.
Future Plans
In a strategic move to enhance its financial position, Zomato’s board approved a plan to raise up to ₹8,500 crore through a qualified institutional placement (QIP). This funding will be instrumental in supporting its expansion plans and improving service capabilities amid rising competition.
Stock Market Reaction
Following the announcement of these results, Zomato’s shares experienced a decline of approximately 3.5%, closing at ₹256.55 per share on the day of the announcement. This drop reflects investor sentiment amid concerns over the company’s ability to meet profit expectations despite strong revenue growth.
Competitive Landscape
The competition in India’s online food delivery market remains fierce. Notably, Swiggy has filed for an initial public offering (IPO), which could further intensify market dynamics. Analysts suggest that Zomato must continue innovating and expanding its offerings to retain its customer base and market share
