Why Did Zomato’s Net Profit Plummet by 77% in Q4?
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Synopsis
Eternal Ltd, formerly Zomato, has reported a shocking 77% decline in net profits for Q4 FY25, dropping to Rs 39 crore. This article delves into the financial figures, insights from leadership, and future strategies that may impact the company’s growth trajectory.
Key Takeaways
- Net profit declined by 77% to Rs 39 crore.
- Expenses surged by 67% year-on-year.
- Revenue increased by 64% to Rs 5,833 crore.
- Future initiatives aim to drive growth without sacrificing profits.
- Blinkit added 294 new stores in Q4.
New Delhi, May 1 (NationPress) Eternal Ltd, formerly known as Zomato, has unveiled a staggering 77% drop in its consolidated net profit, amounting to Rs 39 crore for the fourth quarter (Q4 FY25), a significant reduction from Rs 175 crore in the same quarter last year.
In comparison to the previous quarter, the food delivery giant, which owns Blinkit, faced a net profit decrease of 33%, down from Rs 59 crore in the October-December period (Q3 FY25).
Total expenses surged by 67% year-on-year, escalating from Rs 3,636 crore to Rs 6,104 crore. On a quarterly basis, expenses also rose by over 10%.
The consolidated revenue from operations for the company increased by 64%, reaching Rs 5,833 crore, compared to Rs 3,562 crore in the corresponding quarter of the previous financial year.
During the review period, Zomato's total income climbed to Rs 6,201 crore, up from Rs 3,797 crore a year prior, while expenses soared to Rs 6,104 crore, a rise from Rs 3,636 crore.
Zomato's shares closed at Rs 232.5 each on the BSE, marking an increase of 0.58%.
As indicated in the company’s stock exchange filing, Blinkit has successfully added 294 net new stores in Q4 and is on track to achieve 2,000 stores by December 25.
Deepinder Goyal, Founder and CEO of Eternal, stated, “We don’t see any long-term structural reason for this slowdown, emphasizing that the fundamentals - low restaurant food penetration, increasing urbanization, and rising per capita income in India - remain intact.
He added, “We have several promising initiatives underway, hoping some will succeed and drive higher growth without sacrificing profitability.”
Starting Q4 FY25, the company has begun reporting net order value (NOV) alongside gross order value (GOV) for its B2C operations, which include food delivery, quick commerce, and dining out.
The NOV for their B2C segments increased by 53% YoY (5% QoQ), reaching Rs 17,440 crore in Q4 FY25.
Albinder Dhindsa, Founder and CEO of Blinkit, mentioned their commitment to enhancing customer experience with more consistent delivery and a wider range of products available for purchase through Blinkit.
Point of View
It is crucial to note that while Eternal Ltd has experienced a significant profit decline, the underlying factors such as market fundamentals and urbanization trends remain favorable. The company’s leadership is optimistic, suggesting that strategic initiatives could pave the way for recovery, thereby reflecting a resilient outlook amidst financial challenges.
NationPress
21/05/2025
Frequently Asked Questions
What caused the 77% decline in Zomato's profit?
The decline in profit can be attributed to increased expenses, which rose by 67% year-on-year, alongside a significant drop in net profit compared to the previous quarter.
How did Zomato's revenues perform in Q4 FY25?
Despite the profit decline, Zomato's consolidated revenue from operations grew by 64%, reaching Rs 5,833 crore.
What future plans does Zomato have?
Zomato plans to focus on promising initiatives aimed at enhancing growth while maintaining profitability, including expanding its new store openings.
What is the significance of the net order value (NOV) in Zomato's reporting?
The NOV is crucial as it reflects the gross order value from their B2C operations, providing a comprehensive view of the company's performance in food delivery and quick commerce.
How did the stock market react to Zomato's financial report?
Zomato's shares closed at Rs 232.5, showing a slight increase of 0.58%, indicating market resilience despite declining profits.
