Early on Friday, shares of the world’s largest online food delivery company, Zomato, suddenly increased by over 10 percent. A day after the company reported its first-ever quarterly profit of Rs 2 crore in Q1FY24, compared to a loss of over Rs 180 crore in the same quarter the previous year, Zomato’s shares increased 10.11% to Rs 95.30 at roughly 9:40 am.
Given that Zomato reported a loss of Rs 189 crore in the previous quarter, it should be noted that analysts were expecting the company to report a loss in the quarter. However, the company’s performance demonstrates unequivocally that it has exceeded market expectations.
In the meantime, Zomato’s operating revenue for the quarter stood at Rs 2,416 crore, up 71% from Rs 1,414 crore during the same period the previous year.
In comparison to the loss of Rs 152 crore in Q1FY23, the company’s consolidated adjusted EBITDA reached Rs 12 crore.
Additionally, the adjusted EBITDA margin increased by 9 percentage points year over year to 0.4%.
With the rapid commerce segment excluded, the adjusted revenue showed significant growth, increasing by 33% year over year to reach Rs 2,402 crore.
The next four quarters will see adjusted EBITDA breakeven, according to Zomato.
“We have been working hard to make our business less complex, and putting the right people at the right spots within our businesses. These things do not have a definite/measurable impact, and I can in hindsight say that most of our seemingly “risky” bets have changed the trajectory of the business significantly, much faster than we expected,” said Zomato CEO Deepinder Goyal after the Q1 results.
What brokerages are available on Zomato Q1?
Following its quarterly results, experts have given Zomato’s stock encouraging feedback; their price estimates range from Rs 60 to Rs 130, with the majority being closer to the upper limit.
According to JM Financial, Zomato is the top pick within the listed internet coverage, with a revised target price of Rs 115.
Zomato’s robust performance in the first quarter of FY24 and the company’s estimate of more than 40% YoY increase in adjusted revenue for the following two years build confidence and provide visibility, according to brokerage Nuvama, which has set a target price of Rs 110 for the Zomato stock. After recording the first-ever profitability, the focus is now on producing free cash flow.
Zomato will generate positive reported EBITDA by the March quarter, according to Motilal Oswal Securities, which also anticipates a 5% EBITDA margin for FY25. The business maintained its ‘BUY’ rating and set a target price of Rs 110, which represents a potential gain of 28%.