Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures
Company Name: Zomato Ltd | NSE Code: ZOMATO| BSE Code: 543320 | 52 Week high/low: 305 / 127 | CMP: INR 212 | Mcap: INR 2,04,829 Cr | P/E – 309
About the Stock
➡️Zomato is engaged in multiple business vertical segment such food delivery, quick commerce (Blinkit), going out and B2B supplies. Company has done rapid expansion in quick commerce segment by adding 368 net new stores in Q3FY25.
GOV shoot up led by all segment (up 57% YoY /14% QoQ)
➡️Zomato’s gross order value grew healthy across all the segment. GOV (B2C business) increased 57% YoY (+14% QoQ) to 17,671 Cr thanks to all segment. This growth is attributed to strong growth in food delivery business (up 17% YoY/ 2% QoQ) followed by Quick commerce (blinkit) (up 120% YoY/ 27% QoQ) and Going out (up 191% YoY/ 35% QoQ ). Quick commerce business operating under the name Blinkit
➡️Key operating metrics of all business segment helps in robust growth. In blinkit business 368 net new stores and also added 1.3 million sqft of warehousing space, account for 30% of overall warehousing space. This rapid expansion will take time to ramp up the business across all new store.
➡️Average monthly customer surged 9% YoY (+0% QoQ) to 20.5 Mn in Q3FY25 vs 20.7 Mn in Q2FY25 for food delivery business. While Quick commerce (blinkit business) customer base nearly double from 5.4 Mn in Q3FY24 to 10.6 Mn in Q3FY25 reflecting the change in buying pattern of consumer and habit for convenience buying.
➡️Quick commerce (blinkit business) order value double to 110.3 Mn in Q3FY25 from 5.8 Mn in same quarter previous year led by increase in Average order value and new customer base.
Profitability disappoint on higher depreciation; Quick commerce turn negative from break even
➡️Zomato’s food delivery business has maintained the overall profitability despite the loss in quick commerce business (blinkit). Overall EBITDA surged 218% YoY (-28% QoQ) to 162 Cr driven by strong growth in food delivey business and margin expansion (100 bps YoY). While quick commerce adjusted EBITDA at loss of 103 Cr from -89 Cr in Q3FY24. EBITDA margin has expand 100 bps YoY to 4.71%. led by all segment.
➡️Despite the robust growth in quick commerce GOV, margins are not improving due to the rapid infrastructure expansion.
➡️EBIT decline 10% YoY (-285% QoQ) to -85 Cr due to increment in depreciation by 93% YoY to 247 Cr.
➡️PAT down 57% YoY to 59 Cr due to the higher depreciation. PAT margin decline 300 bps YoY to 1%. While on QoQ basis PAT down 66% due to higher tax expenses and interest cost.
| Years | Q3FY25 | Q3FY24 | YoY (%) | Q2FY25 | QoQ (%) |
| Revenue | 5,405 | 3,288 | 64% | 4,799 | 13% |
| COGS | 1500 | 782 | 92% | 1334 | 12% |
| Employee cost | 689 | 423 | 63% | 590 | 17% |
| Advertisement & sales promotion | 521 | 374 | 39% | 421 | 24% |
| Delivery & related charges | 1450 | 1068 | 36% | 1,398 | 4% |
| Other expenses | 1083 | 590 | 84% | 830 | 30% |
| Total OpEx | 3743 | 2455 | 52% | 3239 | 16% |
| EBITDA | 162 | 51 | 218% | 226 | -28% |
| EBITDA Margin% | 3% | 2% | 93% | 5% | -36% |
| Depreciation | 247 | 128 | 93% | 180 | 37% |
| EBIT | -85 | -77 | 10% | 46 | -285% |
| EBIT Margin% | -2% | -2% | -33% | 1% | -264% |
| Interest expenses | 43 | 18 | 139% | 30 | 43% |
| Other income | 252 | 219 | 15% | 221 | 14% |
| PBT | 124 | 124 | 0% | 237 | -48% |
| Tax expenses | 65 | -14 | -564% | 61 | 7% |
| Tax rate % | 52% | -11% | -564% | 26% | 104% |
| PAT | 59 | 138 | -57% | 176 | -66% |
| PAT Margin % | 1% | 4% | -74% | 4% | -70% |
| EPS | 0.07 | 0.16 | -60% | 0.20 | -68% |
| No. of shares | 906 | 857 | 6% | 872 | 4% |
Valuation and Key metrics
➡️Currently the stock is trading at a multiple of 309x 0.75 EPS at the CMP of 212 Rs. Company trading at 9.65x its book value of 22.1 per share. Trailing twelve months ROE and ROCE stood at 1.12% and 1.14% respectively. Interest coverage ratio stood at 7.45x signify strong solvency.
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