Zomato Shares in Focus After Release of Q2 FY25 Results

On October 22, 2024, Zomato Ltd, a leading food delivery service, announced its financial results for the quarter and half-year ending September 30, 2024. In Q2 FY25, the company reported a remarkable 389% growth in consolidated net profit, reaching ₹176 crore compared to ₹36 crore the previous year. Revenue from operations surged 68% year-on-year to ₹4,799 crore.

This significant profit increase was attributed to improved food delivery margins and the quick commerce segment, which is approaching break-even. Adjusted EBITDA for the quarter soared to ₹331 crore, up from ₹41 crore in the same period last year.

The gross order value (GOV) for B2C businesses grew by 55% year-on-year, totalling ₹17,670 crore in Q2 FY25. On a like-for-like basis (excluding the acquisition of Paytm’s entertainment ticketing business), GOV growth was 53% year-on-year.

In terms of segment performance, the food delivery business achieved adjusted revenue growth of 21% year-on-year, reaching ₹2,340 crore, while GOV for this segment also increased by 21% to ₹9,690 crore. Adjusted EBITDA for food delivery jumped 137% year-on-year to ₹341 crore, with margins improving to 3.5% from 2.6% a year ago.

Zomato’s quick commerce division, Blinkit, saw a 129% year-on-year rise in adjusted revenues, reaching ₹1,156 crore, with GOV climbing 122% to ₹6,132 crore. However, adjusted EBITDA remained negative at -₹8 crore, though losses decreased from ₹124 crore a year ago and widened from -₹3 crore in the previous quarter. Margins for this segment were -0.1%.

Despite most Blinkit stores operating profitably, overall margin expansion remains limited due to ongoing investments in scaling infrastructure. The dining-out segment also performed well, with revenues increasing by 214% year-on-year and GOV rising by 171% during the July-September 2024 period.

Zomato’s cash balance fell by ₹1,726 crore from the previous quarter, mainly due to a ₹2,014 crore payment for the Paytm acquisition. In response, the board approved raising an additional ₹8,500 crore through a qualified institutional placement (QIP) to bolster its financial position amid a competitive landscape.

The company emphasized the need to enhance its cash reserves given the larger scale of operations since its IPO, stating, “While we are now generating cash, we believe strengthening our balance sheet is essential.” Zomato confirmed that there are no immediate plans for minority investments or acquisitions, and the fundraiser is focused solely on fortifying its financial stability.

On October 23, 2024, Zomato shares opened at ₹256.35 and touched the day high of ₹263.65, reflecting a rise of 2.38% at 11:18 AM. 

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