Should you invest in Zomato shares after Q3? (Photo: Reuters)
Zomato Share Price: Shares of online food delivery aggregator Zomato fell 7.4 per cent to Rs 50.35 in Friday’s trade.
Zomato Share Price: Shares of online food delivery aggregator Zomato fell 7.4 per cent to Rs 50.35 in Friday’s trade after it reported a bigger-than-expected quarterly loss on Thursday, pointing to slower growth in food delivery business due to an industry-wide slowdown. it shows. The company’s consolidated net loss for Q3FY23 widened to Rs 347 crore as against Rs 63 crore registered in the same quarter last year. For Q2FY23, the net loss stood at Rs 251 crore.
Meanwhile, the revenue from operations of the Gurugram-headquartered company grew 75 per cent year-on-year (YoY) to Rs 1,948 crore, as against Rs 1,112 crore in the corresponding quarter last year. Sequentially, revenue improved by 17 per cent to Rs 1,661 crore reported for Q2FY23.
Zomato’s adjusted EBITDA (earnings before interest, tax, depreciation and amortization) loss widened to Rs 265 crore in the December quarter as compared to Rs 192 crore in the quarter ended September 2022. Adjusted EBITDA loss stood at Rs 272 crore in the same quarter. quarter of the previous year.
The December quarter was the first full quarter of consolidation of Blinkit’s grocery business. Adjusted revenue grew 66 per cent year-on-year to Rs 2,363 crore, led by 30 per cent growth in the food delivery business.
Excluding the Blinkit business, Zomato turned operationally positive in January even though the food delivery business witnessed a slowdown.
Should you buy, sell or hold Zomato stock? Here’s what analysts say:
Citi maintained its buy rating on Zomato with a target price of Rs 76 after the December quarter results. The management highlighted the recent green shoots.
“The food delivery business has seen low growth. Zomato should be able to fine-tune the mix with more focus. Competitive intensity is not high, and we believe the long-term growth story remains intact,” it said.
Morgan Stanley maintained its Overweight rating on Zomato post Q3 results with a target price of Rs 82.
The brokerage said the company reported a beat on unit economics, but slowed down growth. The GOV increase of 0.7 per cent was led by an AOV increase as orders QoQ declined.
Unit economics in the core business surprised positively, and management is confident of its break-even target, it said, adding that accelerated commerce is showing good traction.
Goldman Sachs has maintained buy rating on the stock with a target of Rs 100 per share.
Food distribution GOV growth was weak, although broadly in line with consensus. Adjusted revenue growth driven by strong growth in the Blinkit and HyperPure segments.
There was a decline in order frequency in MTU and food delivery, with no visibility on demand revival. In addition, food delivery rates declined, largely due to lower delivery fees.
There is a potential near-term pressure on profitability from the launch of Zomato Gold, expansion of dark stores, reports CNBC-TV18.
Meanwhile, brokerage house Nomura has ‘reduce’ rating on the stock with a target of Rs 50 per share.
The food delivery business and gov growth disappointed in a seasonally strong quarter. Contribution margin expansion remains in line with guidance.
Blinkit is in early stages but is reporting strong sequential momentum. High growth may not come together with high margins, reports CNBC-TV18.
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