Shares of online food delivery company Zomato are set to be in focus after the company’s Q2 earnings report revealed a profit miss compared to Street estimates. Despite this, Zomato posted robust growth across key segments, with its profit and revenue significantly improving year-on-year.

Profit Soars 389% YoY

Zomato’s profit for the second quarter surged by 389% year-on-year, reaching Rs 176 crore, up from the same period last year. This substantial growth was primarily driven by increasing food delivery margins and near break-even performance in its quick commerce business.

Revenue Jumps 68% YoY

Revenue from operations climbed 68% YoY, reaching Rs 4,799 crore in the reporting quarter. The strong performance was bolstered by consistent growth in the company’s core businesses and steady expansion in its order volumes.

EBITDA Grows Multifold

Adjusted EBITDA for the quarter saw a significant rise, increasing to Rs 331 crore from Rs 41 crore in the same period last year. This reflects Zomato’s improved profitability, particularly in its core food delivery operations.

Gross Order Value (GOV) Sees Strong Growth

Zomato’s gross order value (GOV) across its B2C businesses improved by 55% YoY, reaching Rs 17,670 crore in Q2 FY25. On a like-for-like basis, excluding the impact of Zomato’s acquisition of Paytm’s entertainment ticketing business, GOV grew by 53% YoY.

Food Delivery Business Performance

In its core food delivery segment, Zomato reported adjusted revenue growth of 21% YoY, totaling Rs 2,340 crore. The GOV for this segment also rose by 21% YoY to Rs 9,690 crore.

Adjusted EBITDA for the food delivery segment jumped 137% YoY to Rs 341 crore, with margins improving to 3.5% in Q2 FY25, up from 2.6% in the same quarter last year.

Blinkit’s Quick Commerce Sees Rapid Expansion

Zomato’s quick commerce business, Blinkit, reported impressive growth, with adjusted revenue surging by 129% YoY to Rs 1,156 crore. The GOV for Blinkit also recorded significant growth, rising 122% YoY to Rs 6,132 crore.

However, despite the strong revenue growth, Blinkit’s adjusted EBITDA remained in negative territory at (-Rs 8 crore), though this marked an improvement from the Rs 124 crore loss a year ago. The EBITDA loss expanded from Rs 3 crore in the preceding June quarter. Margins for Blinkit stood at -0.1%.

Brokerages on Zomato

HSBC on Zomato 

According to an HSBC report on Zomato, the brokerage has issued a buy call on the stock with a target price of Rs 330 per share. The report noted that Zomato’s Q2 food delivery numbers were in line with expectations, while its quick commerce segment outperformed forecasts. 

Margins remained largely stable quarter-on-quarter, attributed to continued investments in expanding quick commerce capacity and brand building. HSBC also highlighted that Zomato’s recent fundraise will provide the company with resources to stay competitive in an increasingly aggressive market.

Nomura on Zomato

In its latest report on Zomato, Nomura has issued a buy call with a target price of Rs 320 per share. The report highlighted that Zomato’s quick commerce segment continues to experience rapid growth, while the food delivery business maintains a steady upward trajectory. 

Nomura noted that the company plans to prioritize growth in its quick commerce division while aiming to achieve neutral EBITDA in the near term.

Stock Performance in last one year 

Zomato shares have delivered positive returns across various time frames. Over the last three months, the stock has shown a positive return of 17.64%, indicating short-term growth. In the last six months, the performance has been even more impressive, with a substantial increase of 36.76%, showcasing the stock’s resilience and upward momentum. 

Year-to-date, Zomato shares have surged by 107.24%, emphasizing the stock’s positive trajectory in the current calendar year. Looking back over the last twelve months, the stock has demonstrated significant growth, surpassing 135%.

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