Stock in Action – Zomato 01 August 2024

Zomato Share Price Movement of Day

Highlights

1. Zomato price discrepancy: A recent viral post has highlighted a significant Zomato price discrepancy between the restaurant's bill & its online menu.

2. Zomato menu price difference: Zomato menu price difference was stark, with items costing significantly more on the app compared to in-restaurant prices.

3. Zomato restaurant bill comparison: Abhishek Kothari's Zomato restaurant bill comparison revealed shocking markup on food items ordered through the app.

4. Zomato Q1 FY25 financial performance: Zomato Q1 FY25 financial performance is expected to show strong growth across its food delivery & Hyperpure businesses.

5. Zomato stock analysis: Our Zomato stock analysis indicates robust potential due to significant year-on-year revenue growth.

6. Zomato IPO news: In recent Zomato IPO news, the company continues to perform well, reflecting positively on its stock price.

7. Zomato profit growth 2024: Analysts are forecasting substantial Zomato profit growth in 2024, driven by increased order volumes & improved earnings from Blinkit.

8. Zomato Blinkit earnings: Zomato Blinkit earnings are set to improve significantly, reducing losses & boosting overall profitability.

9. Zomato Hyperpure revenue growth: Impressive Zomato Hyperpure revenue growth, expected at 65% year-on-year, highlights the success of its B2B food supply business.

10. Zomato share price news: In the latest Zomato share price news, the company's stock is expected to see a positive impact from its strong quarterly performance.

Why is Zomato Share in News? 

Zomato's shares have recently caught the public eye due to a viral post highlighting significant price discrepancies between the restaurant's bill & its online menu on the Zomato platform. Abhishek Kothari, the user on X (formerly Twitter), compared his restaurant bill with Zomato's online prices, revealing substantial markup for food items ordered through the app. This revelation sparked debate about the pricing strategies of food delivery platforms & their impact on consumers. Additionally, Zomato's anticipated robust performance in the April-June 2024 quarter, driven by solid business growth & significant revenue increases, has further fuelled interest in the company's stock.

Twitter Buzz Scenario of Zomato

A viral tweet by Abhishek Kothari brought attention to price discrepancies between the restaurant's in-house bill & Zomato's online menu. Kothari posted images of his bill from Udupi2Mumbai restaurant in Vile Parle & compared them to prices on Zomato, revealing significant markup. For instance, Upma was billed at ₹40 but listed at ₹120 on Zomato, & Thatte Idli was ₹60 on the bill but ₹161 on the app. This sparked debate on X, with users suggesting that restaurants inflate prices on delivery platforms to offset commission fees & convenience of service. Zomato responded by stating that prices on their platform are governed by restaurant partners & assured that they would share feedback with them.

Highlights of Zomato Q1-FY25 Financial Performance

1. Zomato's performance in Q1 FY25 is expected to reflect strong growth across its businesses. 

2. Analysts predict a 62% year-on-year revenue increase, with net profit anticipated to multiply significantly. 

3. The food delivery segment's revenues are projected to grow by 35% year-on-year, while the Hyperpure business may see a 65% year-on-year jump. 

4. Blinkit, Zomato's quick commerce arm, is expected to improve earnings by reducing losses & increasing order volumes. 

5. In the March 2024 quarter, Zomato reported a consolidated net profit of ₹175 crore, with revenues reaching ₹3,562 crore. 

6. For Q1 FY25, analysts expect continued growth driven by strong performance in both food delivery & quick commerce segments.

Brokerage Overviews on Zomato Shares

JM Financial
JM Financial forecasts sequential gross order value (GOV) growth of 8% (25% YoY) in food delivery segment. They expect take-rates to expand to 20.8% in Q1 FY25 from 20.6% in Q4 FY24, with adjusted EBITDA margins improving by 30 basis points sequentially. For Blinkit, they anticipate 22% sequential GOV growth, driven by 20% increase in order volumes. They project take-rate to rise to 19.5% from 19.1% in Q4, driven by ad income & customer fees, with contribution margins expanding to 4.5%.

Kotak Equities
Kotak Equities expects 1Q FY25 revenue growth of 59% YoY, driven by 35% YoY growth in food delivery revenues & 65% YoY growth in Hyperpure revenues. Blinkit revenues are projected to grow by 125% YoY. They foresee a minor sequential reduction in loss for Blinkit but do not expect EBITDA to break even yet due to the addition of over 100 dark stores, which may affect profitability.

Equirus Securities
Equirus Securities predicts 6% QoQ GOV growth in food delivery & 14% QoQ GOV growth in Blinkit. They expect sequential adjusted EBITDA margin improvements of 29 basis points for food delivery & 99 basis points for Blinkit. Key metrics to watch include market share changes, MTU/order volume growth, & customer delivery charges in the food delivery business, as well as net dark store additions for Blinkit. 

Conclusion

Zomato's recent price discrepancy controversy & strong financial performance projections have kept the company in the news, with analysts & investors keenly observing its growth trajectory & market dynamics.