Zomato (Eternal) Share Price

Introduction

Zomato is a leading online food delivery and restaurant discovery platform in India, having shown robust growth across key financial metrics. Its revenue was Rs 7,079 crore in FY23, up 91% YoY. Zomato turned profitable with a net profit of Rs 63 crore versus losses in prior years. Its valuation stands at $5.5 billion as of February 2024. The share price has risen 67% since its IPO in July 2021.

Zomato has demonstrated strong growth across its business segments like food delivery, dining out and quick commerce. With healthy operating metrics and turn to profitability, it is well-positioned to continue leveraging India's large addressable food services market.

Company Overview

Zomato was started in 2008 as Foodiebay by IIT graduates Deepinder Goyal and Pankaj Chaddah in Delhi/NCR. It was renamed Zomato in 2010 as it expanded across major Indian cities. By 2011, Zomato established a monopoly in Delhi/NCR and other metros. In 2012-13, it started international expansion to UAE, Sri Lanka, UK, Turkey, Brazil etc.

Key acquisitions include Urbanspoon, Nextable, MaplePOS, TongueStun Food Network etc. to augment technology, enter new markets, and expand offerings.

Zomato's core offerings

Food delivery - Online ordering and delivery from partner restaurants in 500+ Indian cities and globally. It delivers over 1.5 million orders daily.

Dining out - Restaurant discovery, reservations, reviews etc. in India and overseas. Has a listing of over 1.5 million restaurants.

Hyperpure - Supplies fresh, clean ingredients to restaurants.

Zomato Gold - Subscription for free food delivery for discounts in dining.

Recent launches include quick commerce with Blinkit acquisition and Xtreme parcels delivery.

Zomato leverages advanced machine learning and AI for personalized recommendations. Its growth strategy focuses on consolidating leadership in food delivery and dining out as core offerings while adding new revenue streams.

Financial performance

Zomato has shown strong revenue growth over the last 3 years, with revenues increasing from Rs 1,994 crore in FY21 to Rs 7,079 crore in FY23 – a CAGR of 91%. The company has turned profitable at net level in FY23 with a net profit of Rs 63 crore compared to losses in prior years. Zomato's key segments have shown robust growth. Food delivery GOV (Gross Order Value) grew by 28% YoY to Rs 11,811 crore in Q4 FY24. Dining out GOV grew 207% YoY in the same quarter. Quick commerce GOV grew 97% YoY to Rs 789 crore.

Key operating metrics like number of orders, average order value (AOV), monthly transacting users etc. have all shown healthy growth over the last year. GOV across segments grew 51% YoY in Q4 FY24. Major investments and capex include $700 million acquisition of Blinkit in FY23 as Zomato entered quick commerce segment. It has also invested in companies like Shiprocket, Curefit, Magicpin etc.

Zomato spent Rs 2,278 crore on capital expenditure in FY23, up from Rs 548 crore in FY22, to boost its supply infrastructure and technology capabilities.

Growth outlook

The total addressable food services market in India is estimated to be over $90 billion, presenting massive headroom for growth. Zomato sees significant potential to expand in smaller cities beyond metros. It plans to boost penetration in tier 2 and 3 cities, which currently account for less than 15% of food delivery GOV. Quick commerce expansion is focused on top 8 cities initially, with over 75% of new dark stores opened in these cities in Q4FY24.

The company aims to grow its quick commerce store network from 526 currently to 1,000 by end of FY25. It is also experimenting with new use cases to make the quick commerce platform more relevant in customers' daily lives. Zomato is focused on driving growth in monthly transacting users and order frequency along with increase in average order value. New customer acquisition continues to be driven by marketing investments in branding and promotions.