Zomato reported a 283% quarter-over-quarter (QoQ) increase in net profit to ₹138 crore in the third quarter of FY24, compared to a ₹347 crore loss in the same period previous year.
Zomato shares surged as much as 4.34% to a new high of ₹150.25 apiece on the BSE in early trade on Friday, soaring over 4% to reach a new 52-week high following the company’s outstanding results for the quarter ending December 2023, driven mostly by solid growth in meal delivery companies.
Zomato, the online food delivery platform, saw a 283% surge in net profit in Q3 FY24 compared to the previous year.
In comparison to ₹1,948 crore, YoY, Zomato’s operating revenue in Q3FY24 was ₹3,288 crore, a 69% increase.
The total amount of all orders placed, or the gross order value (GOV) for food delivery, increased by 25% year over year (YoY). The firm anticipates that GOV will continue to expand at a rate of 20% or more YoY and may accelerate further if it observes increases in market share that are higher than anticipated and a recovery in overall consumer demand.
Following the release of Q3 results on Thursday, Zomato shares concluded the day 2.42% higher.
Although Zomato’s growth could have been better, foreign brokerage firm Jefferies said the company’s Q3FY24 performance was another strong quarter, with remarkable Q/C performance and smart margin gains in food delivery. The company believes the result is understandable given the weakness across consumption categories.
Jefferies increased its adjusted Ebitda forecasts by 4–10%. In its base scenario, it anticipates a ~25% CAGR in delivery revenue over FY23–26E. As Zomato unlocks cost reductions and customer willingness to pay for convenience improves, it expects unit economics to continuously improve with scale.
The stock is rated as a “Buy,” and the target price was increased from ₹190 to ₹205 per share.
Emkay Global Financial Services analysts reported that Zomato reported strong performance in the most recent quarter, with growth in all categories.
According to a statement from Emkay Global, “Blinkit maintained its outstanding performance, with GOV increasing 28% QoQ and less losses overall. Food delivery GOV grew 6.3% QoQ, but fell short of ours/company’s own expectations given the muted demand environment.” The food delivery contribution margin improved further to 7.1%, helped by ad-monetization and platform fee.
With Blinkit carrying the majority of the load, Zomato now projects consolidated adjusted revenue to rise at a rate of more than 50% YoY over the next several quarters.
With improved clarity developing on product-market fit and the roadmap to profitability for Blinkit, Emkay Global upgraded its FY25–26E EPS forecasts by 1-2% considering in Q3 performance and revenue mix adjustment. It now values Blinkit at 1x FY26 GOV, compared to book value before.
After valuing the meal delivery business at ₹119 per share on DCF basis, Blinkit at ₹36 per share at 1x FY26E GOV, cash and other investments at ₹15 per share at book value, and Zomato at ₹140, the brokerage maintained its ‘Buy’ recommendation. The target price was lifted to ₹170 per share from ₹140 earlier on SOTP basis.
In the last year, Zomato’s stock has increased by about 121%.
When the market opened at 9:20 am on the BSE, Zomato shares were up 3.75% at ₹149.40 a share.