after hitting at least 50.35 On May 11, the shares of Indian food delivery company Zomato have increased their counterattack. Shares climb 5% 75, increasing the 3-day profit by 25%. Analysts say Zomato has seen a surge in investor interest after announcing its fourth quarter earnings.
Last week, zomato Quarterly revenues were up 75%, driven by an increase in order volumes. During the March 31 quarter, the gross order value – or the total value of all food delivery orders placed on Zomato’s online platform – jumped 77% year-on-year to hit a record high. 5,850 crore, while the average monthly transacting customer was at an all-time high of 1.57 crore.
But higher expenses pushed up the company’s consolidated net loss. 360 crore for the three months ended March 31, above the loss of Rs. 130 crores ago.
“Gross order value has seen a substantial increase, adjusted EBITDA losses continue to decline and the food delivery business has seen substantial improvement. Investors were pleased with management’s remarks that emphasized growth without sacrificing profitability. The company is one of the largest online food service platforms and the industry has a long runway of growth. The company’s position has improved due to the strength of the industry and the number of major players coming down to just two.
improvement from high He said valuations have come down from 169 hit last year and business is showing improvement.
For investors looking to enter Zomato, Mr. Meena cautions: “It will take a significant amount of time for the company to show significant profitability and the current market sentiment is penalizing startups that are growing without showing profits. Thus, we believe that this company is suitable for investors with high risk appetite and a long-term outlook.”
Another brokerage firm JM Financial has given a buy rating on Zomato with a target price of 115.
“With dual focus on growth and profitability, management guided for sequential top line growth to accelerate to double digits in 1QFY23 (despite supply side challenges in some cities), while Adj. A meaningful decline in EBITDA losses is also expected. The company noted that its contribution was profit positive in 120 cities in FY2012 (just 5 in FY2010 out of its top 300 cities,” the brokerage said in a note.
“While we expect Zomato to maintain high-growth momentum in the near term, we reduce our GOV/revenue projections in FY 2013-25E, as the company’s focus on profitability and inflation on demand Because of concerns over the impact of On the other hand, profitability should continue to improve due to strong operating leverage. We increase our WACC (weighted cost of capital) from 12% to 13% due to rising returns and market volatility, leading to a modified DCF-based TP. 115 (vs. 140 ago,” the brokerage said.