Zomato EBITDA Loss Rises 42% To INR 170 Cr In June Quarter, Revenue Grows 28%

Gurugram-based foodtech company Zomato’s revenue from operations increased from INR 591.9 Cr in the quarter ended March to INR 757.9 Cr in June quarter on a standalone basis, growing 28% quarter-on-quarter. Meanwhile, adjusted revenue grew by 26% quarter-over-quarter to INR 1,160 Cr and adjusted EBITDA loss increased 42.66% from INR 120 Cr to INR 170 Cr in the same period, the company’s financials revealed.

However, the company’s loss attributable to equity shareholders fell to INR 356.2 Cr in the June quarter of FY22 from INR 812.8 Cr in the corresponding quarter last year.

“This (EBITDA loss) is largely on account of non-cash ESOP expenses which have increased meaningfully in Q1 FY22 due to significant ESOP grants made in the quarter pursuant to creation of a new ESOP 2021 scheme. This divergence in reported profit/loss and adjusted EBITDA will continue going forward,” the company said.

Zomato’s operating and adjusted revenues in the June quarter of FY21 were INR 2,191 and Cr INR 350 Cr, respectively. But the year-on-year growth seems to be unnaturally high since the first quarter of FY21 was severely impacted by the first wave of lockdowns in 2020.

“Revenue growth was largely on the back of growth in our core food delivery business which continued to grow despite the severe Covid wave starting April. On the other hand, Covid significantly impacted the dining-out business in Q1 FY22 reversing most of the gains the industry made in Q4 FY21,” the company said on its first quarterly result announcement since its public listing.  The foodtech platform’s gross order value increased 37% to INR 4,540 Cr in the June quarter from INR 3310 Cr in the March quarter. Gross order value is defined as the total monetary value of all food delivery orders placed online on the platform in India including taxes, customer delivery charges, gross of all discounts, and excluding tips.

As with all other gig economy companies, Zomato too has faced the ire of gig workers for an alleged decrease in pay amid the pandemic. However, the company refuted those claims, saying: “We added an additional fee for long distance and increase in fuel prices (among other variables) to ensure delivery partners are fairly compensated. The subsequent increase in their earnings per order is ~15% higher than what it was about a year ago.”

The company, which had its public listing on July 23, currently has a market capitalisation of INR 98,025 Cr and its shares were trading at INR 124.9 on the Bombay Stock Exchange at the end of the day’s trading on Tuesday (August 10).

Experts suggest that investors are betting big on the Indian market beyond Zomato to drive this demand. Valuation expert and professor of corporate finance at Stern School of Business at New York University, Ashwath Damodaran, noted in his blogpost on the day of the listing that the company’s shares should be valued at INR 41, almost half of the actual issue price of INR 76.

“That may seem like a lot to pay (INR 41) for a money-losing company with less than INR 20 Bn in revenues in the most recent year, but promise and potential have value, especially when you have a leader in a market of immense size. That said, the stock’s pricing (72-75 INR, per share) makes it too expensive,” he wrote.