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ZOMATO: CMP: 274 Long Term Growth: 56% Q1_fy25 Growth: 75% Q1_fy25 Result Update
Zomato is an Indian multinational restaurant aggregator and food delivery company founded by Deepinder Goyal, Pankaj Chaddah, and Gunjan Patidar in 2008. Zomato provides information, menus, and user reviews of restaurants as well as food delivery options from partner restaurants in select cities. Infoedge is the major promoter & yes many of you are already holding Infoedge for a long time. Zomato is present in around 1000 cities, 2 Lakh active restaurant listings & around 3.2 lakh active delivery partners. Growing Substantially and increasing revenue vertices successfully. Major revenue comes from delivery orders but has created a good model of dine-in, HyperPure and Zomato Pro.
### **Industry Overview:**
The e-commerce and food delivery industry in India is experiencing rapid growth, driven by increasing internet penetration, smartphone usage, and a shift in consumer behavior towards online ordering. The quick commerce segment is also expanding rapidly, catering to the demand for faster delivery of groceries and daily essentials.
### **Peer Group Analysis:**
- **Swiggy:** A primary competitor in the food delivery space, showing similar growth trends but facing intense competition. Sales of Swiggy last year was 11247 Cr which was similar to Zomato but zomato is making Profits while swiggy is still a loss making company.
- **Dunzo:** Competes in the quick commerce segment, focusing on fast deliveries.
- **Blinkit:** Also a strong player in the quick commerce segment, showing significant growth. Zomato is the parent company of Blinkit.
### **Historical Performance:**
Zomato has shown robust growth in revenue and profitability over the past few quarters, with a CAGR of 30% in food delivery GOV from FY20 to FY24.
Sales in 2019 were 1300 Cr which have grown to the landmark 12000 Cr till last year. They were a loss-making company due to an aggressive expansion model yet now the company is making profits for the 6th quarter in a row. The major cost is advertisement, delivery charges, and employees. Just came with the boom IPO of around 8200 Cr, and we saw Zomato opening with the elite club of 1 Lakh Cr Market cap companies. They have the Debt-free model. Yes, we have recommended this company Since the IPO and have been expecting strong sales growth.
### ** Overview of Q1 FY25 Results:**
- **Revenue:** Zomato reported consolidated revenue from operations at INR 4,206 crore for Q1 FY25, a significant increase from INR 3,562 crore in the previous quarter and INR 2,416 crore in Q1 FY24.
- **Profitability:** The profit for the quarter was INR 253 crore, an increase from INR 175 crore in Q4 FY24 and INR 2 crore in Q1 FY24.
- **Adjusted EBITDA:** Consolidated adjusted EBITDA increased by INR 287 crore YoY to INR 299 crore in Q1 FY25, driven by margin expansion across all business segments.
### ** Key Highlights:**
- **Growth:** GOV growth across B2C businesses (food delivery, quick commerce, and going-out) accelerated to 53% YoY (14% QoQ) to INR 15,455 crore.
- **Food Delivery:** Food delivery GOV grew 27% YoY (10% QoQ).
- **Quick Commerce:** Quick commerce GOV grew 130% YoY (22% QoQ).
- **Going-out GOV:** This segment grew 106% YoY (19% QoQ).
- **B2B Business:** Hyperpure’s revenue grew 96% YoY (27% QoQ) with improving profitability.
### ** Segment Performance:**
- **India Food Ordering and Delivery:** Revenue of INR 1,942 crore.
- **Hyperpure Supplies (B2B):** Revenue of INR 1,212 crore.
- **Quick Commerce:** Revenue of INR 942 crore.
- **Going Out:** Revenue of INR 95 crore.
- **All Other Segments:** Revenue of INR 15 crore.
### ** Financial Ratios:**
#### **Profitability Ratios:**
- **Gross Profit Margin:** Increased due to higher revenue and better cost management.
- **Net Profit Margin:** Improved to reflect positive profit growth.
#### **Solvency Ratios:**
- **Debt to Equity Ratio:** Remained stable, indicating a balanced approach to leveraging.
#### **Liquidity Ratios:**
- **Current Ratio:** Improved, indicating better short-term financial health.
- **Quick Ratio:** Also improved, reflecting efficient management of liquid assets.
#### **Return Ratios:**
- **Return on Equity (ROE):** Increased significantly due to improved profitability.
- **Return on Assets (ROA):** Improved, indicating better asset utilization.
- **Future Outlook:** The company plans to continue expanding its quick commerce and going-out segments, targeting 2,000 stores by 2026. Zomato also aims to improve its platform health by enhancing the welfare of delivery partners and expanding restaurant partnerships. We may see this year sales growth of 50% while profits may shoot to 221%. This year we may see the landmark profits of 1000 Cr. New buying can be done during any fall near 146 while some 5% profits can be booked during current rally near 316.
### **Conclusion:**
Zomato's results reflect strong growth and improved profitability across its business segments. The company is well-positioned to capitalize on the growing e-commerce and food delivery market in India, with strategic investments in quick commerce and going-out offerings. The positive financial ratios indicate robust financial health, and the future outlook suggests continued growth and expansion. We may see them cross 50000 Cr sales in Fy_2030 which can give mutliyear rally along with good increasing profits.
If you need more specific data points or further analysis, We will be updating the full report!
