Zomato Shares Plunge to 6-Month Low Amid Blinkit Expansion

Synopsis

Zomato's share price fell to a six-month low due to disappointing Q3 FY25 earnings and increased investment in Blinkit, its quick-commerce business. The stock has dropped significantly, impacting profitability expectations as analysts adjust their earnings forecasts.

Key Takeaways

Zomato shares hit a six-month low.
Company reports a 57 percent decline in net profit.
Investment in Blinkit negatively affects profitability.
Operational revenue increased by 64 percent.
Deepinder Goyal expresses confidence in Blinkit's growth.

Mumbai, Jan 21 (NationPress) Zomato’s share price fell to its lowest level in nearly six months on Tuesday, following disappointing Q3 FY25 results.

The online food delivery leader’s stock reached its nadir since July 23, 2024, dropping by 13.33 percent to Rs 207.80 per share.

As of 12:52 p.m., Zomato’s shares were trading 8.88 percent lower at Rs 218.40. This downturn occurs despite a modest increase of 0.31 percent in the broader Nifty 50 index.

The decline in Zomato's stock value is attributed to the company’s heightened investment in Blinkit, its quick-commerce venture.

Blinkit, which specializes in delivering groceries and essential items, is experiencing rapid growth, prompting Zomato to allocate significant resources towards this expansion. Consequently, the firm’s profitability is anticipated to remain subdued in the ongoing and upcoming financial years.

In its third-quarter report for December 2024, Zomato’s profits were adversely affected by Blinkit’s ambitious expansion plans. The firm is making substantial investments in Blinkit’s growth, leading many analysts and brokerages to downgrade their earnings forecasts and target prices for Zomato’s shares.

On Monday, the online food delivery company announced a 57 percent year-on-year decline in net profit, totaling Rs 59 crore in Q3 of FY25, down from Rs 176 crore during the same period last year.

Operational revenue surged by 64 percent to Rs 5,404 crore in Q3, compared to Rs 3,288 crore a year prior.

Deepinder Goyal, Zomato’s Founder and CEO, indicated that losses within the quick commerce sector this quarter are primarily due to accelerating growth investments that would have otherwise been distributed over a longer period.

He also mentioned that it appears they will achieve their goal of 2,000 stores by December 2025, significantly ahead of the previous timeline set for December 2026.