After the firm released its Q4 earnings on Tuesday, the price of Zomato’s stock dropped by 6% in early trading. On the BSE, Zomato shares dropped as much as 5.98% to ₹182.10 a share.
In contrast to a loss of ₹188 crore during the same period last year, the food delivery platform Zomato recorded a consolidated net profit of ₹175 crore in the fourth quarter of FY24. From the ₹138 crore reported in the December quarter, the net profit increased by 27%.
Zomato’s operating revenue in Q4 FY24 climbed by 73% YoY to ₹3,562 crore from ₹2,056 crore. Across B2C enterprises, gross order value (GOV) increased in the March quarter, reaching ₹13,536 crore, or 51% YoY.
The firm reported an operational EBITDA of ₹86 crore, which is an improvement from the ₹226 crore loss it had at the same time the previous year.
In March 2024, Zomato’s Blinkit, a rapid commerce division, reached operational EBITDA break-even.
Analysts’ optimistic outlook for Zomato shares was upheld, with several increasing their target price due to the company’s sustained outperformance against Blinkit.
The following is what analysts had to say about Zomato’s Q4 earnings and share price:
Global Financial Services, Emkay
Zomato reported consistent operating performance, with revenue exceeding Emkay Global’s projections. However, higher-than-anticipated ESOP expenses were the cause of the margin shortfall.
The brokerage business has largely maintained its projections for FY26E profits per share (EPS) but reduced FY25E EPS by almost 20% in order to account for Blinkit’s slower profitability due to its ambitious retail expansion strategy and increased ESOP expenses.
It retained its “Buy” rating, valuing food delivery at ₹121 per share (DCF basis), Blinkit at ₹93 per share (DCF basis), and cash and other investments at Rs17 per share (BV). Zomato’s share price objective was set at ₹230 per share on a SOTP basis.
Institutional Equities Nuvama
By end of FY25, Blinkit hopes to increase the number of dark stores from 525 in Q4 of FY24 to 1000. Nuvama Institutional Equities stated that although this would have an effect on short-term profitability, it will solidify Blinkit’s position as the undisputed leader in rapid commerce.
Using SOTP, it assigns a $10 billion value to food delivery on Zomato and a $13 billion value on Blinkit. The upgrade resulted from Blinkit’s value rising as a result of its unexpectedly rapid development and obvious leadership in rapid commerce.
Nuvama increased the target price for Zomato shares from ₹180 to ₹245 while keeping a “Buy” recommendation on the stock.
Elara Capital
Zomato’s strong moat in the food industry, which could see it post an adjusted EBITDA CAGR of 47% in FY24–26E, and superior execution for Blinkit (market leadership), aided by better customer experience compared to peers (on-time delivery, better product assortments), are the reasons Elara Capital said it still favors Zomato.
Due to stronger growth for Blinkit and Hyperpure, it increased the consolidated revenue expectations for FY25E and FY26E by 22% and 33%, respectively. However, due to reduced EBITDA for Blinkit (whose priority is expansion) and higher ESOP expenses, its consolidated earnings improvement for FY25E and FY26E is only 7% and 3%, respectively.
The firm upped its target price for Zomato shares to ₹280 from ₹250 and kept its “Buy” recommendation.
Zomato shares were down 4.96% at ₹184.10 a share on the BSE at 9:20 a.m.
