Zomato reported a net profit of Rs 175 crore for the January-March (Q4) period, marking the fourth straight quarter of the food aggregator’s earnings coming in the green.
Revenue rose 73 percent year-on-year to Rs 3,562 crore at a time when the broader e-commerce sector is reeling under the pressure of high inflation and muted demand. During the same quarter last year, Zomato had posted a net loss of Rs 188 crore and a revenue of Rs 2,056 crore.
The food delivery company's stock price has been surging on the back of rising profitability in its core business and the fast growth of its quick commerce arm, Blinkit.
The company's stock is trading at more than 100 times forward earnings, well above multiples for global peers including Uber, Deliveroo, and Meituan.
Goldman Sachs Group Inc. expects profit forecasts to increase for Zomato’s “quick commerce” business Blinkit, analyst Manish Adukia wrote in a recent note. While “earlier investor conversations suggested skepticism around profitability of this business model,” concerns should ease as more results are reported, he said.
The rich valuations for Zomato looked justified given “significantly higher” projected revenue and profits for the company, according to ICICI Securities Ltd. analyst Abhisek Banerjee. The broker adds that the stock has basically moved in line with Doordash Inc. over the past six months amid improving sentiment on tech stocks around the world.
