Zomato Ltd Q3 FY24 Earnings: Strategic Moves in Quick Commerce and Cloud Kitchens
Zomato Ltd: Overview
Zomato Ltd. is a leading Indian online food delivery and restaurant discovery platform with a market capitalization with more than ₹200,000 crore. Established in 2008, it has evolved into one of India’s most prominent food-tech companies, seamlessly connecting millions of users with restaurants and delivery services nationwide. The platform boasts over 17 million monthly active users globally and employs a robust network of 300,000+ delivery personnel. In 2022, Zomato acquired Blinkit, a subsidiary specializing in quick commerce, for approximately ₹4,440 crore, further enhancing its presence in the fast-growing grocery delivery segment. The Indian e-commerce food delivery industry is on a strong growth trajectory, fueled by rising consumer demand, increased digital adoption, and the expansion of services into Tier 2 and Tier 3 cities. The market is projected to grow at a CAGR of 18-20% over the next few years, with the Indian food delivery industry expected to reach ₹1 trillion by FY25. This momentum is likely to continue, as convenience and time savings drive more consumers toward online food ordering.
Latest Stock News
Zomato Ltd, a leading food delivery aggregator, initiated its ₹8,500 crore Qualified Institutional Placement (QIP) offering on Monday, with a floor price set at ₹265.91 per equity share. The indicative price has been established at ₹252.62 per share, representing a 7.6% discount to the previous closing market price of ₹272.9 per share. The offering includes 33.65 crore shares, amounting to 3.8% of the company’s equity.
The company had earlier announced on November 23, 2024, that its shareholders approved the capital-raising proposal through a QIP, following a board decision last month to raise up to ₹8,500 crore. According to Zomato, the fundraising is intended to strengthen its balance sheet at this juncture. In its recent filing, the company noted a reduction in its cash balance by ₹1,726 crore compared to the previous quarter, primarily due to the ₹2,014 crore considerations for acquiring Paytm’s entertainment ticketing business.
Under the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, and relevant provisions of the Companies Act, 2013, the equity shares being offered have a face value of ₹1 each. Zomato also stated it may provide a discount of up to 5% on the floor price, pending shareholder approval. The company plans to utilize the proceeds for business operations and strategic initiatives, though specific details have not yet been disclosed.
Business Segments
- Food Delivery: This segment serves as the cornerstone of the company’s business model. It operates as a comprehensive platform for food ordering and delivery, enabling customers to explore and discover a wide variety of local restaurants. Users can conveniently place orders for their favourite meals and enjoy prompt and reliable delivery services, enhancing their overall dining experience.
- Quick Commerce: This segment focuses on providing ultra-fast delivery services for a broad range of products, including stationery, fruits, groceries, food items, merchandise, electronic gadgets, and more. With an impressive delivery time of just 15 minutes, it caters to the growing demand for convenience and speed. The company has further strengthened this segment through the acquisition of its subsidiary, Blinkit, which exclusively manages and operates the quick commerce operations.
- Going Out: This segment combines the functionalities of a dining-out service and a ticketing platform. It allows customers to explore various restaurants, make reservations, and secure their dining spots effortlessly. Additionally, it offers the convenience of booking tickets for movies, live shows, and other entertainment events, making it a one-stop solution for leisure and recreation planning.
- B2B Supply: The Company’s business-to-business (B2B) segment, branded as Hyperpure, is dedicated to supplying high-quality food ingredients and other essential products to restaurants and other B2B buyers. This service ensures that businesses in the food industry have access to reliable and premium-quality supplies, enabling them to maintain their operational standards and deliver exceptional experiences to their customers
Subsidiary Information
- Blinkit (formerly Grofers): Blinkit is a leading player in the quick commerce segment, acquired by Zomato to expand its footprint beyond food delivery. It specializes in delivering a wide range of products such as groceries, fresh produce, dairy, personal care items, and household essentials within an ultra-fast delivery time of just 15 minutes. The acquisition of Blinkit aligns with Zomato’s strategic focus on catering to the growing consumer demand for convenience and immediacy. Leveraging Blinkit’s robust logistics infrastructure, Zomato has effectively diversified its service portfolio, enhancing its position in the hyper local delivery ecosystem.
- Zomato NZ Media Private Limited: Zomato NZ Media Private Limited is a subsidiary that plays a pivotal role in managing Zomato’s media and advertisement-related operations. This entity is responsible for overseeing content marketing, sponsored listings, and advertisements on the Zomato platform. By enabling restaurants and businesses to increase visibility and attract more customers, Zomato NZ Media Private Limited contributes to the company’s revenue generation through non-delivery channels.
- Zomato Payments Private Limited: This subsidiary focuses on streamlining and enhancing financial transactions within the Zomato ecosystem. Zomato Payments Private Limited provides seamless payment solutions, including an integrated wallet, UPI-based payment options, and third-party payment gateway services. By offering a secure and efficient payment experience for both customers and partner restaurants. It plays a crucial role in strengthening the operational backbone of Zomato’s diverse service offerings.
- Zomato Hyperpure Private Limited: Zomato Hyperpure Private Limited is the company’s B2B initiative aimed at providing premium-quality ingredients and essential supplies to restaurants and food service providers. It ensures a reliable supply of fresh, high-grade produce, meats, dairy products, and other kitchen essentials directly sourced from farmers and manufacturers. Hyperpure helps restaurant partners elevate the quality of their offerings while reducing procurement hassles. This initiative is a cornerstone of Zomato’s mission to support the food industry with innovative and sustainable solutions.
Q3 FY24 & Business Highlights
- Revenue of ₹5405 crore in Q3 FY24 up by 64% YoY from ₹3288 crore in Q3 FY24.
- EBITDA of ₹162 crore in this quarter at a margin of 3% compared to 2% in Q3 FY24.
- Profit of ₹59 crore in this quarter compared to a ₹138 crore profit in Q3 FY24.
- Zomato had about 2000 cloud kitchens in 8 cities only, and they are now focusing more in tier 2-3 cities and less.
- It is adding new business segment in high end electronics segments where margin is higher to play.
- New business competition from Zepto, Swiggy, is affecting the margins of company. And the higher commission is affecting the negotiating with the current restaurants clients.
- Zomato has also started 15 minute delivery in some cities only, to fast the sales and make it marketing move.
- Top 300 dark stores the profitability has not gone down even though there is peers pressure.
Financial Summary
| INR Cr. | Q3 FY24 | Q3 FY25 | FY23 | FY24 |
| Revenue | 3288 | 5405 | 7079 | 12114 |
| Expenses | 3237 | 5243 | 8290 | 12071 |
| EBITDA | 51 | 162 | -1211 | 43 |
| OPM | 2% | 3% | -17% | 0% |
| Other Income | 219 | 252 | 682 | 846 |
| Net Profit | 138 | 59 | -971 | 351 |
| NPM | 4.2% | 1.1% | 13.7% | 2.9% |
| EPS | 0.16 | 0.06 | -1.14 | 0.4 |
