Zomato reports Q4 profit of ₹175 crore, revenue grows 73%
What's the story
Zomato, a leading food delivery platform, has announced a consolidated net profit of ₹175 crore for the quarter ending March 31, 2024.
This marks a significant recovery from the loss of ₹188 crore reported in the same period last year.
However, this profit fell short of ET Now's poll estimate of ₹191 crore.
The company's revenue from operations for the reviewed quarter stood at ₹3,562 crore, representing a year-on-year increase of 73%.
Growth analysis
Sequential profit and revenue growth for Zomato
Zomato's profit rose by 27% sequentially from ₹138 crore posted in the December quarter.
The company also reported an 8.3% quarter-on-quarter increase in revenue.
Despite these positive results, Zomato's stock fell over 7% to the day's low of ₹186.75 on the NSE following the announcement.
This is Zomato's fourth consecutive quarter of profitability, even as the broader e-commerce sector grapples with high inflation and muted demand.
Market outlook
Zomato's stock performance and future prospects
Zomato's stock has been on an upward trajectory due to rising profitability in its core business and rapid growth in its quick commerce arm, Blinkit.
Currently, the stock is trading at more than 100 times forward earnings, significantly higher than global peers including Uber, Deliveroo, and Meituan.
Goldman Sachs expects profit forecasts to increase for Zomato's Blinkit business, according to analyst Manish Adukia who noted that investor skepticism should ease as more results are reported.
Expert opinions
Analysts' take on Zomato's valuation and performance
ICICI Securities Ltd. analyst Abhisek Banerjee stated that the rich valuations for Zomato appeared justified given the "significantly higher" projected revenue and profits for the company.
He added that the stock has essentially moved in line with Doordash Inc. over the past six months amid improving sentiment on tech stocks globally.
This perspective suggests a positive outlook for Zomato, despite missing analysts' estimates in its recent quarterly results.