Zomato stock zooms 14% on revenue surge in Q2

Shares of online food aggregator Zomato Limited surged as much as 13.84% at ₹72.08 on Friday after the company reported a 62.2% year-on-year (YoY) rise in its July-September quarter revenue at ₹1,661 crore against ₹1,024 crore in the same period last year. The food-tech major also narrowed its net loss by 41.6% to ₹251 crore in the July-September quarter against ₹430 crore in the year-ago period. 

Zomato completed the acquisition of quick commerce company Blinkit on August 10 this year and hence the quarterly earnings also include the 50 days financials of Blinkit. On a sequential basis, the company’s total adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) witnessed a growth of 28% at ₹192 crore in the September quarter this year against ₹150 crore in the April to June quarter this year. 

Blinkit’s gross order value (“GOV”) surged 26% quarter-on-quarter to ₹1,482 crore, while the revenue grew 44% on a sequential basis. Adjusted EBITDA loss in quick commerce reduced to ₹259 crore from ₹326 in the previous quarter. Akshant Goyal, the chief financial officer of Zomato said, “The increase in contribution margin is driven by improvements on both cost and revenue side. This has been the result of scale and heightened focus on profitability over the last few quarters. In our view, none of these improvements in contribution margin are temporary in nature.”

Following the Q2 results, the rating agency Credit Suisse has raised the target price of Zomato stock to ₹100 from its previous price of ₹63. Moreover, the global research firm Jefferies has also raised the target price of Zomato stock to ₹100, while giving a buy call. Research firm Morgan Stanley has given an ‘overweight’ rating on the stock with a target price of ₹80 per share.

The shares of Zomato opened a tad higher at ₹65 against the previous closing price of ₹63. On Friday, the stock hit an intra-day high of ₹73.50. This is the first time in two months that Zomato shares have witnessed the biggest gains. In the last three months, the shares of Zomato have surged 25.48%. The market capitalisation of the online food aggregator stood at ₹62,213 crore, with 2.79 crore shares changing hands on the Bombay Stock Exchange as against the two-week average volume of 39.42 lakh. The Zomato stock hit a 52-week high of ₹169 on November 16, 2022, and a 52-week low of ₹40 on July 27, 2022. 

Meanwhile, the BSE Sensex ended 1,181 points or 1.95% higher at 61,795 on Friday, whereas the NSE Nifty 50 index advanced 321 points or 1.78% at 18,349.

Notably, the homegrown food delivery major had a blockbuster listing in July last year when it ended up with a valuation of $14 billion or more than ₹1 lakh crore. With its ₹9,375-crore issue, Zomato was the first multibillion-dollar consumer tech startup to be listed on the Bombay Stock Exchange. At its IPO price, the stock was valued at a market capitalisation-to-sales ratio of 29.9x to its FY21 sales of ₹1,994 crore.