Zomato Ltd, the leading online food delivery platform, has reported a consolidated net profit of Rs 176 crore for the second quarter ending September 30, 2024. This marks a significant increase from Rs 36 crore in the same quarter last fiscal year, reflecting a 389% year-on-year growth. However, the profit has declined by 30% compared to the previous quarter’s profit of Rs 253 crore, raising questions among investors about the future of Zomato share price.
Financial Highlights
The company’s revenue from operations soared to Rs 4,799 crore, up 69% from Rs 2,848 crore last year. This robust growth can be attributed to increased demand in both food delivery and quick commerce sectors. Notably, Zomato’s Gross Order Value (GOV) for its B2C business rose by 55% to Rs 17,670 crore during this period.Despite these impressive figures, Zomato’s total expenses surged to Rs 4,783 crore, resulting in a tighter margin environment. The company is actively expanding its operations, including the recent acquisition of Paytm’s entertainment ticketing business, which has impacted profitability but is expected to enhance long-term growth prospects.
Market Reaction and Future Outlook
Following the announcement of its quarterly results, Zomato’s shares ended 3.5% lower, closing at Rs 256.55 on the National Stock Exchange (NSE). This decline reflects market concerns over the sequential drop in profits and rising competition in the food delivery sector. Competitors like Swiggy are ramping up their operations, intensifying pressure on Zomato to maintain its market share.In an effort to bolster its financial position amid fierce competition, Zomato’s board approved raising up to Rs 8,500 crore through a qualified institutional placement (QIP) of equity shares. This move aims to strengthen Zomato’s balance sheet and support its expansion plans.
Should You Buy Zomato Share Price?
Investors considering whether to buy Zomato shares should weigh several factors:
- Growth Potential: The substantial increase in revenue and GOV indicates strong demand for Zomato’s services. The quick commerce segment is nearing profitability, which could further enhance overall margins.
- Market Position: Zomato remains a leader in the online food delivery space despite increasing competition. Its strategic acquisitions may provide additional revenue streams and bolster its market presence.
- Profitability Concerns: The recent decline in sequential profits raises red flags. Investors should monitor upcoming quarters for signs of recovery or further declines.
Conclusion
Zomato’s latest financial results present a mixed picture: impressive year-on-year growth tempered by sequential profit declines and rising expenses. While the company’s expansion efforts and market leadership position it well for future growth, potential investors should proceed with caution and consider both the opportunities and risks involved.
Final Thoughts on Zomato Share Price
As you contemplate investing in Zomato shares, it’s essential to stay informed about industry trends and company developments. The food delivery market is evolving rapidly, and Zomato’s ability to adapt will be crucial for its long-term success. Investors should keep a close eye on fluctuations in Zomato share price as they navigate their investment decisions.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult with a financial advisor before making investment decisions.
