Zomato shares today went up by 3% with the company announcing Q2 FY25 earnings that impressed. As of October 23, 2024, the stock was trading at Rs 262.60, which translates to a gain of 2.50%.
The company has fetched multibagger returns, up 110.92% YTD. It posted a strong YoY growth of 388.89% in consolidated net profit during Q2 FY25. This certainly resonates with the market strongly. Zomato recently said it intends to raise up to Rs 8,500 crore via QIP. The company increased its platform fee from Rs 7 to Rs 10 ahead of the festive season.
Brokerages have been rather sanguine about Zomato, with many ‘buy’ calls. CLSA reiterate their ‘outperform’ rating on the company and have raised their target price from Rs 353 to Rs 370. Nomura has upgraded the target for Zomato from Rs 280 to Rs 320 while maintaining a ‘buy’ call on the company. Nuvama Institutional Equities had also retained a ‘buy’ call on the company with a target of Rs 325.
Zomato shares today: What is the latest PAT number?
Nuvama said the Q2 FY25 result was good, with the Rs 4,800 crore revenue, while the revenue growth of Zomato came in at 14.1% QoQ and 68.5% YoY. This has beaten the consensus estimation of Rs 4,680 crores.
The EBITDA margin improved to 4.7%, which beat the consensus estimate of 4.5%. The PAT number for Zomato stood at Rs 176 crore, compared with the estimated Rs 254.4 crore, as this is after the payment of taxes on treasury income.
The dark stores for Blinkit are expected to come online in more rapid succession and hence would result in even quicker growth. However, the profitability of Blinkit might be delayed due to the high cost associated with initial acquisition. Nuvama feels that this strategy is appropriate for the competitive quick commerce space in which Zomato operates.
Food delivery contribution margin rose at 7.3% in Q1 FY25 to 7.6%. Adjusted EBITDA margin for Zomato rose 10 basis points over the quarter to 3.5%. Nuvama put the food delivery business of Zomato at $15 billion. Blinkit, Zomato’s quick commerce business, is at $14 billion. Nuvama rolled over its valuation of Zomato to estimates of December 2026.
QIPs worth Rs 8,500 Crore
Market analysts are feeling quite impressed with the growth story of Zomato. Expansion in food delivery and quick commerce is supporting its market position. QIP issue worth Rs 8,500 crore is likely to fuel growth going forward.
Brokerages are hopeful about long-term prospects of Zomato on account of market leadership. Hike in platform fee by Zomato is seen as a tactical approach to revenue enhancement. In short, the Q2 FY25 results from Zomato shares today and its future growth prospects have been well digested in the market.
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