Zomato’s Market Cap Inches Closer To $30 Bn Mark Post Strong Q1 Show

A day after announcing strong results for the first quarter of the financial year 2024-25 (Q1 FY25), foodtech major Zomato’s bull run on the bourses brought its market capitalisation closer to the $30 Bn mark. 

While the share prices surged to a fresh 52 week high of INR 278.45 in early trading hours today (August 2), the startup’s market cap touched $28 Bn. The share prices lost some gain by 2:10 PM, standing at INR 265 with the startup’s market cap at $27.93 Bn (INR 2,33,782.71 Cr). 

Post Q1 FY25 disclosure, the company’s value has increased over 18% from last week’s close of $23.66 Bn.The gains come due to the company’s streak of five consecutive profitable quarters. Marking its maiden profitable quarter in Q1 FY24 with a profit after tax (PAT) of INR 2 Cr, the company has been able to significantly multiply its fortunes since. 

Zomato’s profit after tax (PAT) surged to INR 253 Cr in Q1 FY25 from INR 2 Cr in the Q1 FY24, which was its maiden profitable quarter. On a quarter on quarter (QoQ) basis, PAT grew nearly 45% from INR 175 Cr.

Operating revenue jumped more than 74% to INR 4,206 Cr in Q1 FY25 from INR 2,416 Cr in the corresponding quarter of last year. Sequentially, it grew 18% from INR 3,562 Cr. 

As a result of the performance, brokerage firm Bernstein gave the company’s shares an “Outperform” rating and revised its price target to INR 275 from the erstwhile INR 230. The new PT implies a 17% upside to the share price. 

While the shares of the startup continue to hit fresh record highs on a regular basis, it has had a rocky ride on the bourses in the past. 

The startup made its public markets debut in July 2021, getting listed at INR 116, a 53% premium on its IPO price of INR 76. Over the next 52 weeks, the stock crashed by 56%, while the market cap declined from INR 98,221 Cr ($14 Bn) to INR 42,478 Cr ($5 Bn), well below its last private valuation of $5.4 Bn.

The company’s lows at the bourses came as a result of its acquisition of quick commerce startup Grofers (now Blinkit), $5 Mn investment in kitchen automation company Mukunda Foods, and another investment in UrbanPiper, raising investor eyebrows. 

Two years down the line, Zomato’s quick commerce vertical Blinkit, which was written off as a bad investment for Zomato at the time of its acquisition, stole the show once again, reporting strong growth. While the gross order value (GOV) of Zomato’s three B2C business verticals (food delivery, quick commerce, and going out) grew 53% year-on-year (YoY) during the quarter under review, Blinkit’s GOV grew 130% YoY. 

Moving forward, Zomato is now eyeing to build its ‘Going Out’ business as its third largest in the B2C space. While it is still in with Paytm to acquire its ticketing platform Paytm Insider for around INR 1,500 Cr, CEO Deepinder Goyal said today that the going-out vertical will be one of the key focus areas for the company in the future.

Brokerages have estimated that the acquisition will lead to a bump in Zomato’s share prices earlier. In June, JM Financial retained its ‘Buy’ rating for the stock but reduced its price target (PT) for the stock to INR 250, from April’s INR 260. It said that acquisition of Paytm’s ticketing business will strengthen Zomato’s ‘Going-out’ business, 

“The deal could catapult Zomato to second position in the events & movie ticketing space, behind only BookMyShow,” the brokerage added. 

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