Earnings Outlook
Volume, segment growth, Blinkit to drive Zomato earnings
This story was originally published at 21:08 IST on 21 October 2024
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By Anjali Singh
MUMBAI - Zomato Ltd. is expected to report strong earnings in the September quarter driven by robust volume growth, store additions by its quick commerce platform Blinkit and healthy performance across segments. The food-delivery company is likely to report a consolidated net profit of INR 2.67 billion in Jul-Sept against a net profit of INR 360 million a year ago, according to an average of estimates from seven brokerages.
Sequentially, the net profit is seen up 5%.
The consolidated revenue is seen at INR 46.26 billion, up 62.4% on year and 10% sequentially, according to the average of the estimates. This will be the slowest year-on-year growth in the top line in seven quarters. Kotak Institutional Equities expects revenue growth of 36% on year in the quarter driven by 37% on-year growth in food delivery, 74% on-year growth in Hyperpure and a whopping 122% on-year growth in Blinkit.
This will also be supported by the robust growth in the food delivery segment and Blinkit's gross merchandise value and take rate expansion, the brokerage said. Take rate is the percentage of revenue Zomato retains from each transaction facilitated between restaurants and food providers and customers.
The restaurant aggregator's earnings before interest, tax, depreciation, and amortisation is seen at INR 2.02 billion in the September quarter. The EBITDA projections range from INR 1.32 billion and INR 2.48 billion. The EBITDA is seen improving as the food delivery business is expected to sustain operational improvement and losses in Hyperpure and Blinkit would be contained due to improving efficiencies, Emkay Global Financial Services said.
SEGMENTS
Food delivery and Blinkit are likely to continue to grow in the September quarter on account of higher adoption of quick commerce services. Blinkit is expected to report a minor loss in the September quarter as the new store additions will likely offset the profitability of older stores, Kotak said. Blinkit is expected to continue with expansion plans in the September quarter and is estimated to have added 110 stores, Elara Securities said in a report. "Overall increased interest in the (quick commerce) space by varied firms has increased competitive forces, although Blinkit continues to dominate the space," Elara said.
The food delivery segment is expected to report a gross order value growth of over 20% on year and over 5% on quarter, brokerages said. This will be supported by mid-single-digit growth in order frequency and average order value. The revenue is expected to grow 37% on year in the reporting quarter, Kotak said.
Hyperpure, the wholesale restaurant supply business, is seen continuing its upward trajectory, Motilal Oswal Financial Services said in a report. Hyperpure's revenue is likely to rise 74% on year in the September quarter, the brokerage said. District (by Zomato), its going-out business, will get a boost from the acquisition of the Paytm ticketing business, Elara said. Zomato acquired Paytm's entertainment ticketing business for 20.5 bln rupees in August.
With the company scheduled to detail its earnings for Jul-Sept on Tuesday, investors will closely track the management's comments on food delivery, quick commerce, Blinkit's business operations, and progress on growing advertisement revenue across platforms. On Monday, shares of the company closed at INR 265.70, up 3.2% from the previous close.
Following are the Jul-Sept earnings estimates for Zomato based on reports compiled by Informist from seven brokerage houses:
Brokerage firm | Net Sales (in mln INR) | Net Profit (in mln INR) | EBITDA (in mln INR) |
| Axis Securities Ltd | 43,840.00 | 2,650.00 | - |
| Dolat Capital Market Ltd | 45,532.00 | 2,858.00 | - |
| Elara Securities (India) Pvt Ltd | 48.093.00 | 2,989.00 | 2,115.00 |
Emkay Global Financial Services Ltd | 46,312.00 | 3,215.00 | 2,483.00 |
Kotak Institutional Equities Ltd | 46,440.00 | 3,070.00 | 2,389.00 |
| Motilal Oswal Financial Services Ltd | 47,860.00 | 1,426.00 | 1,322.00 |
| Nuvama Wealth Management Ltd | 45,714.00 | 2,465.00 | 1,799.00 |
Average | 46,255.86 | 2,667.57 | 2,021.60 |
Edited by Saji George Titus
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