Last updated: May 22, 2023, 1:52 PM IST
Zomato’s consolidated revenue from operations during the reporting period was Rs 2,056 crore against Rs 1,211.8 crore in the same period last year.
Zomato reported a reduction in losses at Rs 188.20 crore for the March quarter compared to Rs 346.60 crore in December; Should you invest?
Zomato’s share price rose nearly 3 percent on Monday after the food delivery company’s net loss fell to Rs 187.60 crore in Q4FY23, compared to Rs 359.70 crore in the same quarter last year.
However, the revenue was slightly less than the estimated Rs 2,122 crore. In FY23, Zomato’s loss fell to Rs 971 crore from Rs 1,209 crore a year ago. Revenue rose 69 percent to Rs 7,079 crore.
Zomato reported a decrease in losses of Rs 188.20 crore for the March quarter compared to Rs 346.60 crore in the December quarter and Rs 359.70 crore in the same quarter last year. Zomato said that excluding fast trading, his company was running a positive adjusted Ebitda in the March quarter. It said it is aiming for positive adjusted Ebitda (and also PAT) including fast trading over the next four quarters.
“Zomato’s path to profitability has become even more promising. Zomato’s adjusted Ebitda ex-quick commerce hit the milestone in profitability ahead of our and Street’s expectations. We expect management to achieve its goal of clocking adjusted EBITDA for the consolidated business by Q4FY24 given their strong execution, growth momentum in Blinkit and tapering ESOP costs. After recent exits, the company has renewed leadership – CEO and COO for food delivery and CEO for Hyperpure. These leaders have been with Zomato/Blinkit for more than five years,” said Nuvama Institutional Equities.
Does Zomato deliver more returns?
“Zomato aims to expand food delivery EBITDAM to 4-5% of GOV from the current 1.2%. The superior Q4 performance reinforces our belief in Zomato’s ability to execute and deliver profitable growth. Improving consumer confidence is expected to drive GOV/MTU growth. We maintain BUY on Zomato with a target price of Rs 90 per share,” Emkay analysts said.
“Zomato has made three senior promotions to CEO/COO roles that allay our concerns about high turnover at the senior leadership level. We value the company using the DCF method, assuming a terminal growth rate of 4% and cost of capital of 12.5%. We maintain our BUY rating with a target of Rs 80,” said analysts at Motilal Oswal.
Nomura India believes the share is worth Rs 45 as it believes achieving high gross order value (GOV) growth and strong contribution margin improvement in its core food delivery business remains a challenge. Zomato’s relaunch of its Gold membership plan should bring back growth, Nuvama Institutional Equities said, suggesting a target of Rs 94 on the stock. Motilal Oswal Securities sees the share at Rs 80. It said Zomato’s food delivery performance has been below par in recent quarters, but the company has seen a strong turnaround in profitability over the period.
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