Preview of Zomato’s Q3 Results: Expected 61% year-on-year Revenue Growth Driven by Food Delivery and Blinkit 


Zomato, the online food delivery app, is set to unveil its financial results for the quarter ended December 31, 2023, on February 8. According to brokerages, the platform is anticipated to showcase strong performance, driven by increased demand during festive periods, the World Cup event, and a higher volume of orders through its Gold program.

Analysts foresee significant growth in Zomato’s quick commerce division during the upcoming December quarter. Investors will closely observe forecasts regarding growth opportunities, margin sustainability, and updates regarding Blinkit.

In the second quarter, Zomato witnessed substantial sequential profit growth, reaching ₹36 crore. Concurrently, revenue from operations saw an impressive year-on-year surge of 71 percent, amounting to ₹2,848 crore.

According to Kotak Institutional Equities, a brokerage firm, revenue is expected to grow by 61 percent year-on-year. “We anticipate 3QFY24 revenue growth to reach 61% YoY, driven by a 45% YoY increase in food delivery revenues (with a 29% YoY growth in GMV and a 70 bps yoy take rate expansion), an 89% YoY rise in Hyperpure revenues, and a 106% YoY surge in Blinkit revenues. Our food delivery GMV growth projection implies an 8% sequential increase,” the firm stated.

Zomato implemented a 33 percent increase in its platform fee for food delivery services, elevating it from ₹3 to ₹4 per order in key markets starting January 1, 2024. The company initiated a convenience fee of ₹2 per order in August 2023, which later escalated to ₹3 per order by the end of August. According to Elara Securities, the resulting convenience fee over two months has contributed to a quarter-to-quarter (QoQ) growth of 60 basis points and a year-on-year (YoY) growth of 220 basis points in the take rate (which stands at 19.4%, excluding delivery charges) in Q2FY24.

According to the brokerage firm, the increase in convenience fee per order is expected to play a crucial role in enhancing Zomato’s adjusted EBITDA for its food delivery segment, which amounted to INR 2,040 million in Q2FY24. The total volume of orders for the food delivery division was 650 million in FY23; projections suggest an increase to 830 million in FY25E and 940 million in FY26E.

The firm believes that a INR 1 increment in the convenience fee across markets will yield a positive impact of 1.2% on revenue, 30 basis points on the take rate, and 5.3% on the adjusted EBITDA of the food delivery segment. Since the fee hike (from INR 3 to INR 4) has been implemented in select markets, the anticipated impact on food delivery revenue for FY25-26E is approximately 0.5-0.6%; consequently, the take rate is expected to increase by 10-15 basis points each in FY25E and FY26E. Additionally, the brokerage firm anticipates a positive impact of approximately 2.0-2.5% on adjusted EBITDA for the food delivery business in both FY25E and FY26E, attributed to the rise in take rates (assuming this is implemented in half of its markets).

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