Zomato’s recent financial results for Q2FY25 have revealed a remarkable year-on-year growth, significantly enhancing the company’s position in the competitive food delivery and quick commerce market. Despite facing some challenges, including the impact of a recent acquisition, the company continues to demonstrate resilient growth, particularly in its net profit and operational revenues. To further bolster its future growth, Zomato plans to raise ₹8,500 crore through a Qualified Institutional Placement (QIP) strategy.
Net Profit Growth
Zomato reported a striking 389% year-on-year increase in consolidated net profit, reaching ₹176 crore for Q2FY25, up from ₹36 crore in the same quarter last year. However, the growth narrative was somewhat tempered by a 30.43% decline in net profit compared to ₹253 crore in Q1FY25, mainly attributed to acquisition expenses related to the acquisition of Paytm’s ticketing business.
Revenue Increase
Zomato’s revenue from operations saw a significant jump to ₹4,799 crore, reflecting a robust 68.5% rise compared to ₹2,848 crore in the prior year. The total income for Q2FY25 was recorded at ₹5,020 crore, indicating a 64% growth from ₹3,060 crore in Q2FY24. This performance underscores Zomato’s capability to increase its operational efficiency within a competitive market.
EBITDA Improvement
The adjusted EBITDA improved significantly to ₹331 crore from the previous year’s ₹41 crore, driven by increased margins from both the food delivery and quick commerce segments. This notable advancement in operating profitability illustrates Zomato’s effective cost management and revenue optimization strategies throughout the year.
Gross Order Value (GOV)
Across its B2C businesses, Zomato achieved a 55% year-on-year growth in Gross Order Value (GOV), culminating in ₹17,670 crore. Excluding the effects of the Paytm acquisition, the organic growth still indicates a robust 53% increase compared to the previous year. This metric demonstrates the high demand and acceptance of Zomato’s core offerings in the food delivery market.
Blinkit Growth
Zomato’s quick commerce business, Blinkit, showed impressive resilience, with a 129% year-on-year revenue increase, reaching ₹1,156 crore. The GOV for Blinkit also ascended 122%, amounting to ₹6,132 crore. Nevertheless, it’s noteworthy that the adjusted EBITDA remains negative at ₹8 crore, indicating areas for improvement in profitability for this segment.
Cash Balance
Zomato’s cash reserves saw a decline of ₹1,726 crore, primarily due to a substantial ₹2,014 crore outflow for the recent acquisition of Paytm’s ticketing business. This reduced cash position raises questions about the company’s liquidity but is also a strategic investment in expanding its service footprint.
Fundraising Initiatives
In a proactive measure to strengthen its financial base, Zomato’s board approved a plan to raise up to ₹8,500 crore through a Qualified Institutional Placement (QIP). This strategic fundraising is viewed as essential for enhancing cash reserves and facilitating further growth amidst competitive pressures in the food delivery and technology sectors.
Launch of District App
Zomato is also set to unveil a new app called District in the coming weeks. This initiative aims to streamline user transition from the existing Zomato and Paytm platforms to a more cohesive and user-friendly interface. The District app is anticipated to enhance customer engagement and retention, ultimately supporting Zomato’s growth trajectory.
Share Price Performance
In response to these results, Zomato’s stock experienced a slight decline, dropping 3.58% to ₹256.20 on the Bombay Stock Exchange (BSE). This dip in share price may indicate investor caution amid fluctuating market conditions and the pressures of sustaining long-term profitability.
Conclusion
Zomato’s Q2FY25 financial performance underscores a blend of significant gains in net profit, revenue, and operational improvements. Despite facing challenges from acquisition costs and cash balance reductions, the company’s plans for substantial fundraising and the launch of the District app indicate a strategic focus on future growth and sustainability. With these initiatives, Zomato appears poised to navigate the competitive landscape and enhance its market position in the food delivery and quick commerce sectors.
FAQ
- What is Zomato’s net profit for Q2FY25?
- Zomato reported a net profit of ₹176 crore for Q2FY25, marking a 389% increase compared to the previous year.
- Why did Zomato’s share price drop after the financial results?
- The share price dipped by 3.58% to ₹256.20, potentially indicating investor caution amid the competitive market environment.
- What are Zomato’s plans for future fundraising?
- Zomato plans to raise up to ₹8,500 crore through a Qualified Institutional Placement (QIP) to bolster cash reserves and support future growth initiatives.
