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From the large-cap space, Zomato (NS:) is one stock where the Q1 FY24 earnings report has shocked the street. The company which was reeling under losses since its inception has reported its first-ever quarterly profit, of INR 2 crore.
This food delivery service platform has come a long way from just a startup a few years ago to becoming the 79th largest listed company in the country today, with a market capitalization of INR 72,916 crore. Here’s a deep dive into numbers.
It seems like this lifestyle shift of people is finally reaping the benefits for Zomato. In Q1 FY24, the adjusted revenue jumped 54% YoY to INR 2,786 crore which is commendable considering the size of the business. I mean how many large caps are able to clock this kind of growth at the top line? On top of this, the management is expecting 40%+ growth for the next couple of years.
Talking about its food delivery business, the gross order value (GOV) jumped 13.9% YoY to INR 7,318 crore as average monthly transacting customers grew from 16.7 million in Q1 FY23 to 17.5 million this quarter.
Its quick commerce business (BlinkIt) which is a relatively smaller arm is increasing its revenue like anything. This quarter, it clocked a YoY revenue jump of a mammoth 126% to INR 617 crore. The GOV also noticed a healthy jump of 82.6% to 2,140 crore in Q1 FY24, from 36.8 million orders. A year ago, the company received 22.2 million orders in this quarter. However, the average order value (AOV) has seen a slight jump of 10.2% to INR 582.
These numbers would have been even better had there been no disruption to the business in April 2023 when the delivery partners of Blinkit went on strike due to a change in their payout structure. This was a challenging period of about 45 days for the company.
From here on, I don’t think that the company would face many challenges in sustaining its profitability, however, the main question is, can Zomato shares still be bought?
Well, looking at the rally that’s been going on since the stock bottomed out in January 2023, it might be a better idea to wait for the prices to cool off. The stock closed at INR 95.4 this week, and a retracement to around INR 88 might be a better long opportunity. On the upside, it won’t be surprising if the stock touches INR 115 in the near future.
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