Zomato, the popular food delivery service platform, has reported its first-ever quarterly profit, surpassing expectations and shocking industry analysts. After years of losses, the company has turned a corner, recording a profit of INR 2 crore in the first quarter of the fiscal year 2024.
Zomato has come a long way since its startup days and now stands as the 79th largest listed company in India, with a market capitalization of INR 72,916 crore. This significant growth is a testament to the changing lifestyle habits of people and the increasing demand for food delivery services.
In Q1 FY24, Zomato’s adjusted revenue witnessed an impressive year-on-year increase of 54%, reaching INR 2,786 crore. This growth is particularly remarkable considering the scale of the business. Not many large-cap companies can achieve such a surge in their top-line revenue. Furthermore, the management has expressed optimism for continued growth, with expectations of a 40%+ increase over the next couple of years.
The company’s food delivery business also experienced positive results. The gross order value (GOV) rose by 13.9% YoY to INR 7,318 crore, while the average monthly transacting customers increased from 16.7 million in Q1 FY23 to 17.5 million in the current quarter.
Zomato’s quick commerce business, known as BlinkIt, has witnessed remarkable growth as well. Its revenue jumped an astounding 126% YoY to INR 617 crore this quarter. The GOV for BlinkIt also saw a healthy increase of 82.6% to INR 2,140 crore, with 36.8 million orders compared to 22.2 million orders a year ago. However, the average order value (AOV) showed a slight rise of 10.2% to INR 582.
It is worth noting that the numbers could have been even better if not for the disruption the company faced in April 2023. During that period, the delivery partners of BlinkIt went on strike due to a change in their payout structure, leading to approximately 45 days of challenging circumstances for the company.
Looking ahead, Zomato seems well-positioned to sustain its profitability and continue its growth trajectory. However, the question remains whether it is the right time to buy Zomato shares.
Considering the recent rally since January 2023 and the stock reaching a low point, it may be wise to wait for a price cooldown. The stock closed at INR 95.4 per share this week, and a retracement to around INR 88 could present a better long-term opportunity. On the flip side, if the stock manages to maintain its momentum, it wouldn’t be surprising to see it reach as high as INR 115 in the near future.
In summary, Zomato’s first-ever quarterly profit and its impressive growth demonstrate the company’s ability to adapt to changing consumer preferences. With a strong performance in Q1 FY24 and promising revenue projections, Zomato is poised for continued success in the food delivery industry. However, potential investors should carefully analyze the stock’s current price and monitor market trends before making any investment decisions.
