Zomato has showcased remarkable performance in its second quarter of FY25, with revenues soaring to ₹4,800 crore. This growth is primarily attributed to the significant expansion of its Blinkit, Hyperpure, and Going Out segments, while its Food Delivery service continues to maintain steady growth.
Investments Affecting EBITDA Margins
Despite the strong revenue growth, Zomato’s EBITDA margin remained relatively stable as the company prioritizes investments in scaling its infrastructure. Analysts remain optimistic, anticipating substantial future growth for the online food giant.
Positive Market Reactions
HSBC has reaffirmed a ‘buy’ rating for Zomato, setting a target price of ₹330 per share. The brokerage noted that Zomato’s food delivery performance met expectations, and its quick commerce segment exceeded projections. HSBC believes the company’s recent fundraising efforts will equip it to remain competitive in an increasingly crowded market.
Blinkit’s Performance Shines
Blinkit, Zomato’s quick commerce venture, has demonstrated impressive results, with its revenue more than doubling to ₹1,156 crore in Q2. Analysts view Blinkit as a transformative opportunity for Zomato, particularly in the retail and grocery sectors.
Analysts’ Outlook
Motilal Oswal has echoed the positive sentiment, maintaining a ‘buy’ rating and predicting improved profit margins for Zomato over the next few years. The firm expects the company’s PAT margins to increase to 4.7% in FY25, 8.6% in FY26, and 12.9% in FY27.
Strategic Goals Ahead
Zomato is focused on expanding its dark store network, with a target of reaching 2,000 by December 2026. The upcoming launch of the new District app aims to consolidate its Going Out services into a single platform, creating a significant B2C offering.
Fundraising Initiatives
In addition to its operational growth, Zomato has announced a significant fundraising effort of up to ₹8,500 crore, which will bolster its competitive stance in the market.
Stock Performance
Zomato shares experienced a slight decline of 3.5%, closing at ₹256.55 on the National Stock Exchange. However, the stock has seen a notable increase of approximately 106% this year, significantly outperforming the Nifty index.
Yearly Growth Comparison
In the past year, Zomato’s stock has surged by 135%, offering substantial returns to investors compared to the Nifty’s 28% increase during the same period.
Zomato’s strategic investments and focus on growth areas like Blinkit indicate a strong outlook for the company, positioning it well for future success in the competitive food delivery and quick commerce landscape.
( This article is for informational purposes only and does not constitute financial advice. Please consult a financial advisor before making any investment decisions.)
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