Zomato's Flavorful Victory: Rs 175 Cr Net Profit Rings in Q4 Surge

• The Online Food Delivery market in India is projected to touch a revenue of US$43.78bn in 2024.
• It is expected to show an annual growth rate (CAGR 2024-2029) of 16.14%.

The profitability landscape within the online food delivery sector in India can be demonstrated by the revelation of a substantial Rs 175 crore net profit by industry leader Zomato for the January to March quarter.

Online food delivery startup Zomato Ltd made headlines on Monday as it unveiled a consolidated net profit of Rs 175 crore for the January-March (Q4) period, signaling its fourth consecutive quarter in the green. This achievement comes amidst a backdrop of rising revenue, with the company reporting a substantial 73 percent year-on-year increase to Rs 3,562 crore, outperforming market expectations and defying broader economic challenges.

In a regulatory filing, Zomato Ltd disclosed its notable financial performance, a stark departure from the Rs 188 crore net loss it posted during the same quarter of the previous fiscal year. Zomato has attributed the surge in revenue to robust demand in its core business amidst high inflation and muted consumer spending.

Stock Surges on Back of Strong Performance

The news of Zomato's profitability sent ripples through the market, propelling its stock price upward. Analysts point to the growing profitability of its core business and the rapid expansion of its quick commerce arm, Blinkit, as key drivers behind the surge. Zomato's stock is currently trading at more than 100 times forward earnings, significantly outpacing global peers like Uber, Deliveroo, and Meituan.

Analysts at Goldman Sachs Group Inc. anticipate a further uptick in profit forecasts for Zomato’s quick commerce business, Blinkit, signaling a shift in investor sentiment towards the company's profitability prospects. Similarly, ICICI Securities Ltd. analyst Abhisek Banerjee suggests that Zomato's rich valuations are justified given the projected revenue and profit growth, aligning with positive sentiment on tech stocks worldwide.

Quarterly Financial Highlights

Breaking down the quarterly figures, Zomato reported consolidated revenue from operations at Rs 3,562 crore, a significant increase from Rs 2,056 crore reported in the same quarter of the previous year. Sequentially, the company saw a 27 percent rise in profit from the preceding quarter, with revenue up 8.3 percent quarter-on-quarter.

The consolidated financial results also include unaudited information from 19 subsidiaries, reflecting total assets of Rs 92 crore as of March 31, 2024. While total revenues for the subsidiaries amounted to Rs 4 crore and Rs 14 crore for the quarter and year ended March 31, 2024, respectively, the net loss after tax stood at Rs 23 lakh and Rs 2 crore for the same periods.

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