Food delivery company Zomato on Monday said after the Reserve Bank of India announced the withdrawal of ₹2000 currency notes from circulation, the company has been swamped with ₹2,000 notes for cash-on-delivery orders. The food ordering platform said that 72% of their cash on delivery orders were paid via ₹2,000 notes.
In a tweet, the food aggregator said, "Since Friday, 72% of our cash on delivery orders were paid in ₹2,000 notes." The company has cash on delivery payment options for both its food delivery business and quick commerce arm, Blinkit.
On Friday, the country's central bank announced the withdrawal of ₹2,000 denomination banknotes from circulation. The currency will, however, continue to remain a legal tender before it is phased out in a time-bound manner. The banking regulator has provided a deposit and/or exchange facility for ₹2,000 banknotes until September 30, 2023.
₹2,000 notes can be exchanged into banknotes of other denominations and can be made up to a limit of ₹20,000/- at a time at any bank starting from May 23, 2023. The ₹2,000 denomination banknote was introduced in November 2016 to meet the currency requirement of the economy post demonetisation wherein the government withdrew the legal tender status of all ₹500 and ₹1,000 banknotes in circulation at that time.
The RBI has issued a slew of guidelines for banks including providing appropriate infrastructure at their branches such as "shaded waiting space, drinking water facilities, etc. considering the summer season."
Brokerages upbeat on Zomato
Meanwhile, Zomato's consolidated net loss for the March quarter for FY23 narrowed to ₹187.6 crore, registering a decline of 48% year-on-year (YoY), as against ₹359.7 crore in the same period last year. The company's revenue from operations during the quarter under review surged by 70% to ₹2,056 crore as against ₹1,211.8 crore in the same period last year. Of this, the company’s food delivery business reported revenue of ₹1,530 crore during the quarter under review, whereas the revenue for its quick commerce business stood at ₹363 crore. The revenue for the company's business-to-business segment stood at ₹478 crore. The company's gross order value stood at ₹6,569 crore in the March quarter.
Following the company's Q4 results, brokerage firms have revised the target price of Zomato. Analysts at ICICI Securities have revised the target price of Zomato’s stocks to ₹83 from ₹75 while maintaining a 'BUY' rating. "We note a sustained improvement in profitability of the food delivery business and meaningful reduction in losses in the hyperpure and quick commerce businesses. This in our view has significantly improved the visibility of profitability in the medium term. We have upgraded our Revenue, EBITDA and PAT estimates for FY25E by 21%,139% and100%. We now think Zomato consolidated (including Blinkit) could turn profitable on an Adjusted EBITDA basis (₹179mn) as early as FY24E," the brokerage firm said in a note.
Nuvama Institutional Equities has set a target price at ₹94 and Motilal Oswal has set a target price of ₹80 for Zomato.
On Monday, the share price of Zomato settled 1.5% lower at ₹63.57 apiece on the BSE.