Zomato Shares Price Declined For 3rd Day After Q3 Results. 5% Down Today

Market Performance

Zomato's stock extended its decline for the third consecutive session on January 22, falling 5% during early trading hours on the BSE. The shares opened at ₹207.40, lower than the previous close of ₹214.65, and dropped to ₹203.80. Over the past three sessions, the stock has seen an 18% decline, reflecting investor concerns over the company's recent performance.

Key Factors Behind the Decline

The drop in Zomato's share price follows the release of its Q3FY25 financial results, which showed a sharp 57.3% year-on-year decrease in net profit to ₹59 crore compared to ₹138 crore in Q3FY24. Sequentially, the decline was steeper, as net profit in Q2FY25 stood at ₹176 crore.

Despite this, Zomato's revenue from operations surged by 64.4% year-on-year to ₹5,405 crore, up from ₹3,288 crore in the corresponding quarter last year. The gross order value (GOV) for its consumer-facing businesses, including food delivery, quick commerce, and dining-out services, grew by 57% to ₹20,206 crore.

The setback was primarily attributed to higher expenses incurred in the rapid expansion of Blinkit, Zomato's quick-commerce division. Blinkit reported an EBITDA loss of ₹30 crore in Q3FY25, a significant decline from the positive EBITDA of ₹48 crore recorded during the same period last year. Nevertheless, Zomato's overall EBITDA improved significantly from ₹51 crore in the previous year to ₹162 crore

Company Details and Miscellaneous Information

Zomato's quick-commerce arm, Blinkit, has been a focus area for growth, reflecting the company's ambition to capitalize on a fast-growing sector. However, the rapid expansion of Blinkit's operations and associated costs have put pressure on profitability, contributing to market apprehension despite the overall growth in revenue and order volumes.

Summary

Zomato shares have faced significant pressure after the Q3FY25 earnings report, driven by concerns over shrinking profitability despite strong revenue growth. While Blinkit remains central to Zomato's growth strategy, its near-term losses have weighed on investor sentiment. The long-term success of this investment will be closely monitored as the company balances growth with profitability.