Shares of online food delivery aggregator Zomato rallied nearly 8% on the BSE to ₹49 apiece in Tuesday's opening deals as its consolidated net loss in the first quarter of the current financial year almost halved to ₹186 crore due to higher other income. The company had reported a net loss of ₹360.7 crore in the year-ago period.
During the quarter under review, consolidated revenue from operations rose 16% to ₹1,414 crore from ₹1,212 crore in the March quarter and 67% from ₹844 crore a year ago. This was driven by a 10% sequential jump in its gross order value (GOV) to ₹6,430 crore in Q1FY23, which was led by order volumes and a mild growth in average order values.
“In our recent note, we highlighted the management focus on path to profitability. 1QFY23 results now suggest that we underestimated the urgency, as adj. Ebitda loss came at a low of ₹1.5 bn, with break-even at food delivery. Heartening to see this is despite a double-digit QoQ growth in GOV," said global brokerage Jefferies.
Blinkit is also mirroring the trend with strong growth coupled with eye on loss. We will revise our estimates post the call on Tuesday, it added while maintaining its Buy rating on Zomato shares with a target price of ₹100.
“Q reinforced confidence on Zomato’s core business with food ordering adjusted revenue growth at 14.8% QoQ, with adjusted EBITDA break-even earlier than anticipation. Continued traction in Hyperpure (up 40% QoQ) aided overall revenue growth. While we like Zomato’s core business, we remain cautious on its quick commerce foray, given higher competitive intensity, unclear profitability roadmap, more complex operation and smaller TAM," said brokerage Ambit. It has Buy rating on Zomato shares with a target price of ₹103 apiece.
Indications of cash conservation and no more minority investments give us comfort on adequacy of cash reserves (USD 1.4 bn in 1Q) until overall business turns EBITDA positive, Ambit's note added.