Zomato, an Indian multinational restaurant aggregator and food delivery company, founded by Deepinder Goyal and Pankaj Chaddah in 2008, is in the food delivery business where it links the customer and the restaurants.
It earns 90% of revenue from this segment as commission from the restaurants. It also earns revenue from advertisement (within the app) and pro membership (it contributes to a minor portion of the revenue).
In 2021, Zomato made headlines with its Rs.9375 crore IPO, which was massively popular, getting oversubscribed by 38.25 times! It made a stellar debut on Dalal Street on July 23 as the stock opened at Rs 116 on the NSE, a 52.63 percent premium to its final offer price of Rs 76.
The stock soared on its debut but faced a rough patch later due to global market changes.
Within a few months, it started correcting on a heavy basis. In March 2022, the stock was down by over 46% in the past 6 months. According to market experts, these new age tech stocks took a hit due to large global sell-off.
In the same month, Zomato announced an investment of $150 million into blinkit in the form of debt. In June 2022, it announced the acquisition of Blinkit and by August 2022, it completely acquired the quick commerce company.
However, this move initially led to heavy losses as acquisition of a loss making company amid mounting losses in Zomato’s fundamentals led to a net loss of INR 122.5 crore, in FY22.
The macroeconomic downturn, Zomato’s lackluster financial performance, and its acquisition of Blinkit led to a sharp decline in the share price. Besides, some of the institutional investors offloading their stake company further hurt investor sentiment.
Fast forward to June 2023, things started looking up as it was declared that the worst was over as the share price surged to a 52-week high, crossing its IPO price band for the first time since April 2022.
Even though the valuations were considered ‘unjustifiable’ by many investors as it crossed the Rs.100 level mark, the stock has been growing constantly on the technical charts. Its last traded price in April 2024 was among the range of Rs.185
Today, zomato is showing robust financial performance along with Blinkit and Hyperpure. In the recent news shares of Zomato rose more than 4 percent in the morning trade on April 22 after the company raised its platform fee to Rs 5 per an order and also suspended its inter-city food delivery service.
In the December quarter, its food delivery business reported a 30 percent on-year increase in adjusted revenue, reaching Rs 2,025 crore on a consolidated basis.
Blinkit doubled revenue to Rs 644 crore during the period. Zomato reported a consolidated net profit of Rs 138 crore in Q3 against a net loss of Rs 347 crore in the year-ago period. Revenue surged Rs 3,288 crore from Rs 1,948 crore in the previous year.
