Zomato’s Food Delivery Business Will Grow 30% Annually Over Next 5 Years: CEO

Zomato’s Food Delivery Business Will Grow 30% Annually Over Next 5 Years: CEO

SUMMARY

Zomato's food delivery business is reportedly expected to grow at an annual rate of 30% over the next five years, according to the company's food delivery CEO Rakesh Ranjan

The foodtech major currently holds 58% market share in food delivery segment and recorded a gross order value of INR 322.24 Bn last fiscal year, while preparing for an INR 8,500 Cr QIP in December

Morgan Stanley maintains 'overweight' rating on Zomato's stock and has raised its price target to INR 355, citing strong market leadership and growth potential in quick commerce

Foodtech major Zomato reportedly expects its core delivery business to grow at an annual rate of 30% over the next five years.

“The food delivery sector is still in its nascent stages in the country and … more competition will only foster innovation and growth which will benefit the sector overall,” said Rakesh Ranjan, Zomato’s food delivery CEO, as quoted by Reuters.

“The food delivery sector is still in its nascent stages in the country and … more competition will only foster innovation and growth which will benefit the sector overall,” he added.

The Gurugram-based company currently dominates the food delivery space with a 58% market share, compared to its rival Swiggy’s 34%. 

Its food delivery business, which accounts for 58% of revenue, recorded a gross order value of INR 322.24 Bn ($3.82 Bn) last fiscal year, maintaining an average annual growth of 30% over the last four years.

Ranjan expects to maintain this growth pace for the next four to five years, “if not more” as he eyes additional growth from new restaurant launches.

The company has expanded its restaurant network to about 247,000 average monthly active restaurant partners as of March, marking an 18% increase year-on-year.

Zomato is rolling out new features including scheduled delivery service, discounted cancelled order options, and a large order fleet for gatherings up to 50 people. However, “phenomenally high” attrition among delivery drivers remains a challenge, leading the company to offer more benefits and flexibility to onboard gig workers.

The company’s recent performance shows strong growth with operating revenue increasing 68.5% YoY to INR 2,848 Cr in Q2. Its PAT surged 389% from INR 36 Cr, while food delivery GOV rose 5% QoQ to INR 9,690 Cr. Quick commerce arm Blinkit’s GOV increased 25% QoQ to INR 6,132 Cr.

Meanwhile, Zomato is preparing to launch an INR 8,500 Cr QIP in December, with Morgan Stanley selected as the investment bank. The fundraise aims to enhance its cash balance, which stood at INR 1,726 Cr at the end of September 2024.

Morgan Stanley maintains an “overweight” rating on Zomato’s stock and has raised its price target to INR 355 from INR 278, citing strong market leadership and growth potential in quick commerce.

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