Zomato Reports Strong Q4 Results, Shares Fall 6%: Is It a Buying Opportunity?

Zomato share price experienced a 6% decline in early trading after the company revealed its Q4 results. Shares fell to ₹182.10 on the BSE, despite the company posting a consolidated net profit of ₹175 crore in the fourth quarter of fiscal year 2024, showcasing a significant increase from the loss of ₹188 crore in Q4 of the previous year. This marked an impressive 27% profit growth from the third quarter where the net profit was ₹138 crore.

Revenue from operations also soared for Zomato, with an increase of 73% in Q4FY24, reaching ₹3,562 crore from ₹2,056 crore in the comparable period. The Gross Order Value (GOV) rose by 51% to ₹13,536 crore in the business-to-consumer sector. Zomato’s operating EBITDA stood at ₹86 crore, a positive shift from the ₹226 crore loss reported a year ago.

Nuvama Institutional Equities, one of the analysts, pointed out that Blinkit, Zomato’s quick commerce division, reached operational EBITDA break-even in March 2024. The extension of Blinkit’s dark store count to 1000 by the end of fiscal year 2025 was also highlighted, mentioning a temporary impact on profitability but a move that solidifies Blinkit’s dominant position in quick commerce.

Emkay Global analysts reported that Zomato marginally missed the margin expectation due to higher ESOP costs but maintained a consistent performance. They retained a ‘Buy’ rating for Zomato shares with a target price of ₹230, emphasizing Blinkit’s continuing success driving the stock’s growth.

Elara Capital showcased optimism towards Zomato for its strong market presence in the food industry. They believe the company will maintain an EBITDA CAGR of 47% through 2024-2026 and applauded the solid execution of Blinkit, especially its market leadership in quick commerce.