Zomato’s recent Q4 earnings announcement sparked a 6% drop in its share price during early Tuesday trading. Let’s delve into the details of the report and understand what led to this market reaction.
Financial Performance Highlights:
- Zomato reported a consolidated net profit of ₹175 crore for Q4 FY24, a significant improvement from the loss of ₹188 crore in the same period last year.
- The net profit saw a notable 27% growth from ₹138 crore recorded in the December quarter.
- Revenue from operations surged by 73% year-on-year (YoY) to ₹3,562 crore in Q4 FY24, showcasing robust growth momentum.
- Gross order value (GOV) for the March quarter climbed by 51% YoY to ₹13,536 crore, particularly driven by growth across B2C businesses.
Operational Improvements:
- Zomato reported an operating EBITDA of ₹86 crore for Q4 FY24, marking a significant turnaround from the loss of ₹226 crore in the same period last year.
- Notably, Zomato’s quick commerce arm, Blinkit, achieved operational EBITDA break-even in March 2024, highlighting its improving operational efficiency.
Analyst Perspectives:
- Emkay Global Financial Services noted Zomato’s steady operational results, with revenue surpassing estimates. However, the margin miss was attributed to higher-than-expected ESOP costs.
- While maintaining a ‘Buy’ rating, Emkay Global revised down its FY25E earnings per share (EPS) by ~20%, considering Blinkit’s slower profitability due to aggressive store additions and increased ESOP costs.
- The brokerage firm retained a Zomato share price target of ₹230 per share on an SOTP basis, valuing food delivery at ₹121 per share (DCF basis), Blinkit at ₹93 per share (DCF basis), and cash & other investments at ₹17 per share (BV).
Conclusion: Despite the temporary share price dip, analysts remain optimistic about Zomato’s future prospects, particularly driven by the continued outperformance of Blinkit. The company’s robust financial performance and operational improvements underscore its resilience and growth potential in the competitive food delivery market.
As Zomato continues to innovate and expand its offerings, investors are advised to closely monitor its strategic initiatives and financial results for potential long-term value creation.
For more updates and insights on Zomato and other market trends, stay tuned to our blog.
