According to JM Financial, Zomato’s Q2 performance suggests that its revenue growth might outpace its gross order value (GOV) growth, reaching 19.1%. This positive trend is attributed to an enhancement in take-rates.
Zomato Ltd witnessed a nearly 5% increase in its shares in Friday’s trading session ahead of the food aggregator’s Q2 earnings. The stock surged by 4.83%, reaching a peak of Rs 112.70 on the BSE. The total number of Zomato shares traded so far is 28.55 lakh, slightly below the two-week average of 34.63 lakh shares.
In their preview note, JM Financial anticipated Zomato’s revenue growth to outpace its gross order value (GOV) growth at 19.1%, citing an enhancement in take-rates. The domestic brokerage predicts the contribution margin to reach 6.8% of the average order value (AOV), compared to 6.4% in Q1. This improvement is expected to be solely driven by take-rate. However, JM Financial noted that the adjusted Ebitda margin expansion might be constrained, with a possible increase of only 30 basis points sequentially, attributed to salary hikes in July.
In the case of BlinkIt, we anticipate a robust sequential growth of 17% in gross order value (GOV), primarily due to a significant increase in orders. Additionally, we expect an improvement in take-rates, reaching 19.3% from 17.9% in Q1, driven by advertising income. This positive development is expected to contribute to the company achieving profitability at the contribution level for the first time. The anticipation is that the Ebitda loss will narrow down to Rs 6 crore, compared to Rs 48 crore in the June quarter.
According to a recent report by ICICI Securities, they anticipate that Zomato’s quick commerce business could achieve a positive contribution on a full-quarter basis by Q2FY24 and become profitable at the adjusted Ebitda level by the June quarter of FY25.
According to their analysis, the quick commerce business is projected to enhance adjusted Ebitda as a percentage of gross order value (GOV) by 620 basis points over the next four quarters. Kotak Institutional Equities predicts a 57% year-on-year increase in Zomato’s net sales, reaching Rs 2,607 crore. The brokerage expects Ebitda to be Rs 9.9 crore, with Ebitda margins at 0.4%. Kotak Institutional Equities suggests that the company may turn profitable on a year-on-year basis, reporting a net profit of Rs 42.6 crore. This growth is attributed to a 28% YoY increase in food delivery revenues, 103% YoY growth in Hyperpure revenues, and a substantial 205% YoY growth in Blinkit revenues.
“We incorporate a 10 basis points sequentially higher contribution margin of 6.5% in the food delivery business. The improved profitability in the food delivery sector, coupled with reduced losses in Hyperpure and Blinkit businesses, contributes to the overall increase in adjusted Ebitda,” they stated. B&K Securities predicts Zomato’s sales to reach Rs 2,803 crore, reflecting a 69% year-on-year increase, while forecasting a net profit of Rs 71 crore.