
Zomato’s shares tumbled 7% in early trade to ₹223, extending losses from the previous session when the stock dropped over 7% after the company reported disappointing Q3 FY25 results. Rising competition in the quick commerce segment and weak profitability dragged investor sentiment.
Key Financial Highlights:
- Revenue from Operations: ₹5,405 crore (+64.4% YoY)
- Total Income: ₹5,657 crore (+61.3% YoY)
- Net Profit: ₹59 crore (-57.2% YoY, missed estimates)
- Total Expenses: ₹5,533 crore (+63.5% YoY)
- Consolidated Adjusted EBITDA: ₹285 crore (+128% YoY), but impacted by Blinkit losses.
Competition and Margin Pressure:
Zomato’s Q3 results revealed challenges in its quick commerce segment, which saw heightened competition leading to increased investments and a temporary pause in margin expansion. Albinder Dhindsa, CEO of Blinkit, acknowledged the competitive pressures but remained optimistic about the future.
- Gross Order Value (GOV):
- Food delivery: +17% YoY, +2% QoQ
- Quick commerce: +120% YoY, +27% QoQ
- Going out: +191% YoY, +35% QoQ
- Hyperpure revenue: +95% YoY, +13% QoQ
Dhindsa stated, “Heightened competition has led to a pause in margin expansion in the business, which is expected and should be temporary.” The company aims to achieve its target of 2,000 Blinkit stores by December 2025, a year earlier than initially planned.
Brokerages on Zomato:
- UBS: Retains ‘Buy’ with a ₹320 target; highlights margin expansion despite slower food delivery growth.
- Macquarie: Retains ‘Underperform’ with a ₹130 target; flags competitive intensity and prolonged Blinkit losses.
- Nomura: Maintains ‘Buy’ with a ₹290 target; sees strong positioning in Q-commerce.
- Jefferies: Lowers target to ₹255; retains ‘Hold,’ citing mixed results.
- BOFA: Reiterates ‘Buy’ with a ₹375 target; optimistic about long-term growth.
Analyst Insights:
The company reported mixed performance across segments, with food delivery showing slower growth but improving margins. However, the quick commerce business weighed heavily on profitability, contributing a loss of ₹103 crore during the quarter.
Shareholder Letter Highlights:
- Despite the competition, Zomato reported stable customer retention in its Blinkit segment.
- Top-performing Blinkit stores demonstrated robust contribution margins, reinforcing long-term growth potential.
Disclaimer: This information is for informational purposes only and should not be considered financial advice. Always consult your financial advisor before making investment decisions.