Online food delivery giant Zomato Ltd reported an impressive 389% year-on-year surge in net profit for Q2FY25, amounting to ₹176 crore, compared to ₹36 crore in the year-ago period. However, sequentially, the company’s net profit dropped 30.43% from ₹253 crore in Q1FY25, indicating short-term challenges.
Strong Revenue Growth Despite Competitive Pressure
For the July-September quarter, Zomato’s revenue from operations stood at ₹4,799 crore, marking a 68.5% rise compared to ₹2,848 crore in the same quarter last year. The total income for Q2FY25 also witnessed significant growth, reaching ₹5,020 crore, up 64% year-on-year.
The company’s adjusted EBITDA showed a sharp increase, growing to ₹331 crore from ₹41 crore in Q2FY24, highlighting operational improvements. Zomato credited this rise to improved food delivery margins and the quick commerce business nearing break-even.
Gross Order Value and B2C Business Growth
Zomato’s Gross Order Value (GOV) for Q2FY25 saw a 55% year-on-year increase, reaching ₹17,670 crore. Excluding the impact of acquiring Paytm’s entertainment ticketing business, GOV showed a 53% YoY growth and a 13% QoQ improvement.
Blinkit’s Impressive Performance but Ongoing Losses
Blinkit, Zomato’s quick commerce arm, posted a 129% year-on-year growth in adjusted revenue, amounting to ₹1,156 crore. The business recorded a 122% YoY growth in GOV, reaching ₹6,132 crore. However, Blinkit’s adjusted EBITDA remained negative at (- ₹8 crore), signaling ongoing challenges despite narrowing losses from last year.
Cash Balance and Strategic Fundraising
Zomato’s cash balance took a hit, decreasing by ₹1,726 crore due to the ₹2,014 crore spent on acquiring Paytm’s entertainment ticketing business. To bolster its finances, Zomato’s board approved raising an additional ₹8,500 crore through a Qualified Institutional Placement (QIP). CEO Deepinder Goyal emphasized the importance of this move given the competitive landscape and the company’s larger scale today.
New District App on the Horizon
CEO Deepinder Goyal announced plans to launch District, a new app, within the next four weeks. The main focus is on a seamless transition from Zomato’s and Paytm’s platforms to District, enhancing customer experience in quick commerce and entertainment ticketing.
Zomato Share Price Takes a Dip
Following the Q2FY25 results, Zomato’s share price on the BSE closed 3.58% lower at ₹256.20. Technical analyst Rajesh Bhosale from Angel One noted that the stock broke below its support of ₹260 and could potentially drop to ₹240 unless it recovers above ₹270.
Zomato’s impressive growth story, combined with the launch of District and strategic fundraising efforts, positions it strongly, but the company faces short-term challenges, especially in its quick commerce segment and competitive market conditions.
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