Shares of Zomato surged 5% to reach a two-year high of Rs 151.45 on the BSE during Friday’s intraday trade, following the company’s robust performance in the December quarter. Zomato reported its third consecutive quarter of consolidated net profit, amounting to Rs 138 crore in Q3FY24, a significant increase from Rs 36 crore in the previous quarter. Notably, the company had reported a loss of Rs 347 crore during the same period last year.
The stock has witnessed a remarkable surge of 28% over the past two months, reaching its highest level since January 2022. Zomato’s rally reflects investors’ confidence in the company’s growth trajectory and financial performance. At 09:40 am, Zomato was trading 3% higher at Rs 148.55, outperforming the S&P BSE Sensex, which rose by 0.13%.
In Q3FY24, Zomato recorded a robust 69% year-on-year growth in revenue from operations, reaching Rs 3,288 crore compared to Rs 1,948 crore in the same period last year. The company’s adjusted earnings before interest, tax, depreciation, and amortisation (Ebitda), including its quick-commerce business Blinkit, remained positive for the third consecutive quarter at Rs 125 crore, up from Rs 41 crore in Q2FY24.
The adjusted Ebitda margin of 5.3%, surpassing analysts’ estimates of around 4%, was primarily driven by operating leverage. Zomato’s food delivery contribution margin expanded by 50 basis points quarter-on-quarter to 7.1%, supported by a higher take rate.
Motilal Oswal Financial Services (MOFSL) highlighted that Zomato’s growth was fueled by Blinkit, which rose by 27% quarter-on-quarter, while food delivery revenue grew by 10% quarter-on-quarter, driven by a higher take rate. The brokerage firm expects Zomato to report a strong 38% adjusted revenue compound annual growth rate (CAGR) over FY24-26, considering its dominant market share and strong growth in the food delivery business and Hyperpure.
Analysts at JM Financial Institutional Securities also reiterated their positive outlook on Zomato, considering its robust industry tailwinds and strong balance sheet with net cash of Rs 12,000 crore as of December 2023.
Zomato’s stellar performance in the December quarter reflects its resilience and ability to capitalize on evolving market dynamics, positioning the company as a key player in the hyperlocal delivery space amidst growing consumer demand.