Shares of Zomato Ltd rose as much as 13.69% on Friday after the food delivery company posted a profit for the first time. Zomato's net profit stood at ₹2 crore for the first quarter compared to a loss of ₹186 crore in the year-ago period.
The stock opened at ₹89 against its previous closing price of ₹86.55. The counter hit its 52-week high of ₹98.40 in intraday trade on the National Stock Exchange (NSE). The food ordering firm's market cap rose to ₹81,600 crore.
Revenue from operations soared 71% year-on-year to ₹2,416 crore during the April-June quarter as against ₹1,414 crore in the corresponding quarter of the previous year.
"We have been working hard to make our business less complex, and putting the right people at the right spots within our businesses. These things do not have definite/measurable impact, and I can in hindsight say that most of our seemingly 'risky' bets have changed the trajectory of the business significantly, much faster than we expected," says Deepinder Goyal, managing director and chief executive officer of Zomato.
Commenting on the company's quick commerce unit, Goyal says Blinkit's gross order value (GOV) is very close to Zomato's GOV in some of the large cities where the company has an overlapping presence. "This is just the start, and I believe that 10 years from now, Blinkit will drive more value for our shareholders than Zomato," says Goyal.
Revenue from its business-to-business subsidiary Hyperpure grew 126% year-on-year to ₹617 crore in Q1 FY24, driven by growth across Zomato's core restaurant supplies business as well as the newer quick commerce opportunity that it started tapping a couple of quarters ago.
"In our restaurant supplies business, we increased the minimum order value threshold below which restaurants are not allowed to place orders on Hyperpure. This led to two things - 1) the smaller, unprofitable restaurants churned out and 2) the average order value on our platform went up, driving both growth in revenue and improvement in profitability. As the business scales, we are also seeing some efficiency gains in our overall supply chain cost, which drove further improvement in profitability in the quarter," says Goyal.
The Zomato CEO says the company's dining-out business is finally starting to shape up well. ₹515 crore of GOV was transacted through Zomato Dining-Out in India in Q1 FY24, which is around 7% of the GOV Zomato's food delivery business did in the same quarter.
Union Minister of State for Skill Development & Entrepreneurship and Electronics & IT Rajeev Chandrasekhar congratulated Zomato for turning profitable. This is a bright beacon to all investors and startups that a path to profitability can and must be the outcome that all Indian tech startups work to achieve, Chandrasekhar tweeted.