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Online food delivery platform Zomato delivered a sweet surprise in its Q3 FY24 results, turning a net profit of ₹138 crore, exceeding analyst expectations and marking a significant turnaround from a ₹347 crore loss in the same period last year.

Revenue growth

Zomato's strong performance can be attributed to several factors. Let’s have a look at some of them.

  • Increased demand: The festive season and the Cricket World Cup fueled a surge in food delivery orders, driving a 69% year-on-year growth in revenue from its core food delivery business.
  • Quick commerce success: The company's quick commerce division, Blinkit, witnessed even more impressive growth, with revenue more than doubling compared to the previous year.
  • Overall revenue jump: Combined, these factors contributed to a healthy 82% increase in the company's consolidated revenue, reaching ₹3,288 crore in the quarter.

Profitability concerns remain

While the profit turnaround is a positive development, the margin remains narrow, and profitability across the entire business is still a concern. The quick commerce segment, despite its rapid growth, continues to operate at a loss as Zomato invests heavily in marketing and expansion.

Looking ahead

Zomato faces several challenges in its pursuit of sustainable profitability. Here are some of them.

  • Maintaining growth momentum: Continuing to capture market share and grow revenue while navigating a competitive landscape will be crucial.
  • Optimising quick commerce: Finding ways to make Blinkit profitable without compromising its growth trajectory is a key hurdle.
  • Investor outlook: Despite the positive results, some investors may remain cautious due to the company's high valuation and lingering profitability concerns.

Things you should consider

As always, thorough research and evaluation of detailed financial statements are crucial before making any investment decisions. Consulting with qualified financial advisors remains essential for obtaining personalised guidance based on individual circumstances and risk tolerance.

Disclaimer

This blog provides a factual overview based on publicly available information and does not constitute financial advice. Conduct your own research and consult with qualified professionals before making any investment decisions.

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