Shares of Zomato zoomed 13 per cent in early trade today after online food delivery firm’s September quarter loss narrowed to Rs 250.80 crore compared to Rs 434.90 crore loss in the corresponding quarter of the last fiscal. However, the Q2 loss was higher than Rs 186 crore loss in the June quarter of the current fiscal. Buoyed by the Q2 show, Credit Suisse raised its target price for the stock to Rs 100, 56.37 per cent higher against the previous close of Rs 63.95. Zomato stock climbed 12.97 per cent to Rs 72.25 on BSE. The stock opened with a gain of 2.58% at Rs 65.60 against the previous close of Rs 63.95.
Shares of Zomato were trading higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
However, the stock has lost 50.18 per cent in one year and declined 48.96 per cent since the beginning of this year. Market cap of the firm rose to Rs 60,118 crore on BSE.
Total 93.71 lakh shares changed hands amounting to a turnover of Rs 65.29 crore on BSE. The share hit a 52-week high of Rs 169.10 on November 16, 2021 and a 52-week low of Rs 40.55 on July 27, 2022.
The consolidated revenue of Zomato surged 62.20 per cent to Rs 1,661.30 crore in the September quarter against Rs 1,024.20 crore in the corresponding quarter last year.
Zomato said Blinkit’s gross order value (GOV) rose 26 per cent quarter-on-quarter to Rs 1,482 crore while the revenue grew 44 per cent quarter-on-quarter. Adjusted Ebitda loss in quick commerce fell to Rs 259 crore from Rs 326 crore in the June quarter, leading to adjusted Ebitda (as a percentage of GOV) of minus 17.5 per cent in September quarter
compared with minus 27.8 per cent in June quarter.
For food delivery business, average monthly transacting customers grew 4.4 per cent sequentially to 1.75 crore in September quarter against 1.67 crore in June quarter.
“While our food delivery business has been growing and steadily moving towards profitability, I believe there is room for the business to grow much faster than what it is currently trending at. I don’t know if I can attribute this to the macro environment — primarily because I know for a fact that we could have innovated and executed better in the last couple of months. The restaurant and food delivery industry in India is still nascent and we need to relentlessly execute to tap into the large opportunity,” said Deepinder Goyal, CEO at Zomato.
The acquisition of Blinkit (quick commerce) closed on August 10 and, September quarter results included 50 days of Blinkit financials, the company said in a BSE filing.
Morgan Stanley has an overweight stance on the stock with a target price of Rs 80. Contribution margins in food delivery improved to 4.5% (against 2.8% in Q1) and beat Morgan Stanley estimates by 3.3%. Quick commerce showed good progress on reduction in losses QoQ, said the international financial services agency.
CITI has assigned a buy call and raised target price to Rs 85. This is the second consecutive quarter of sharp contribution margins expansion in food delivery business (4.5% of GOV; Citi:3.2%) even as GOV growth was weak at 3% QoQ (Citi estimated GOV growth at 8% QoQ). The company clearly prioritised profitability over GOV growth, said the brokerage.
Credit Suisse raised its target price to Rs 100 and said Q2 profitability was improving well ahead of estimates while growth remained steady. There was a key surprise- sharp improvement in food delivery contribution margin to 4.5% of GOV. “We upgrade overall EPS by 48%/60%/102% for FY23/24/ 25Estimated,” said Credit Suisse.
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