Share price of Zomato fell 7 percent intraday on February 10, a day after the food aggregator reported its December quarter earnings.
The company’s consolidated net loss for Q3FY23 widened to Rs 347 crore against Rs 63 crore registered in the same quarter last year. For Q2FY23, the net loss stood at Rs 251 crore.
Meanwhile, the Gurugram-headquartered company’s revenue from operations zoomed 75 percent to Rs 1,948 crore year-on-year (YoY) as against Rs 1,112 crore in the corresponding quarter last year. Sequentially, revenue improved by 17 percent as against Rs 1,661 crore reported for Q2FY23.
Zomato’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss increased to Rs 265 crore in the December quarter as compared to Rs 192 crore in the quarter ended in September 2022. Adjusted EBITDA loss stood at Rs 272 crore in the corresponding quarter of the previous year.
Here is what brokerages have to say about stock and the company post December quarter earnings:
Morgan Stanley
Research firm has kept ‘overweight’ rating on the stock with a target at Rs 82 per share. The GOV (gross order value) growth led by Average order value (AOV) growth as orders declined QoQ. The take rates have come down due to lower customer delivery fee.
The quick commerce is showing good traction, reported CNBC-TV18.
Goldman Sachs
Broking firm has maintained buy rating on the stock with a target at Rs 100 per share.
The food delivery GOV growth was weak, though broadly in-line with consensus. The adjusted revenue growth driven by strong growth in Blinkit & Hyperpure segments.
There was a decline in MTUs & order frequency in food delivery, with no visibility on demand revival. Also, decline in food delivery take rate, largely due to lower delivery fee.
There is near-term potential pressure on profitability from dark store expansion, launch of Zomato gold, reported CNBC-TV18.
Nomura
Brokerage house Nomura has kept ‘reduce’ rating on the stock with a target at Rs 50 per share.
The food delivery business and GOV growth disappointed in a seasonally strong quarter. The contribution margin expansion is in-line with guidance retained.
Blinkit is in early stage but reporting strong sequential movement. The high growth with high margin cannot come together, reported CNBC-TV18.
Jefferies
Research house has maintained ‘buy’ rating on the stock with a target at Rs 100 per share.
The company continues to show an urgency to reduce loss with adjusted EBITDA (ex-Blinkit) is a positive. The outlook seems positive as break-even target stays and another positive in context of Zomato gold.
The green-shoots in food delivery are also visible on demand in January. Blinkit also sees strong growth with swift reduction in losses, reported CNBC-TV18.
CLSA
Broking firm has maintained ‘buy’ rating on the stock with a target at Rs 70 per share. The adjusted EBITDA improves in food delivery but monthly transacting users decline.
Company’s profitability metrics is on right track, but growth parameters is slow. Hyperpure and Blinkit recorded strong growth. Management actions & results indicate profitability is a focus for core food delivery operations.