Zomato’s Q3 FY 2025 Performance: Profit Down, Expansion Up
On January 20, 2025, Zomato announced its Q3 FY 2025 results, revealing a 57.3% drop in net profit to ₹59 crores compared to ₹138 crores in the same quarter last year. The decline was attributed to increased expenses, primarily due to aggressive investments in expanding Blinkit, Zomato’s quick-commerce subsidiary.
Financial Highlights
| Metric | Q3 FY 2024 (₹ crores) | Q3 FY 2025 (₹ crores) | YoY Change (%) |
|---|---|---|---|
| Revenue | ₹3,288 | ₹5,405 | +64% |
| Profit After Tax (PAT) | ₹138 | ₹59 | -57.3% |
- Revenue rose 64% YoY to ₹5,405 crores.
- Adjusted EBITDA grew 128% YoY, but dropped 14% QoQ.
- Blinkit contributed significantly to revenue but continues to incur losses.
Blinkit: Growing but Still a Cost Center
Blinkit, Zomato’s quick-commerce arm, recorded 12.25 lakh daily orders in Q3 FY 2025, showing robust growth but ongoing losses.
| Metric | Q3 FY 2024 | Q3 FY 2025 | YoY Growth (%) |
|---|---|---|---|
| Orders (in crores) | 5.58 | 11.03 | +98% |
| Average Order Value (₹) | 635 | 707 | +11% |
| Store Count | 791 | 1,007 | +27% |
Zomato aims to expand Blinkit’s dark stores to 2,000 by December 2025, a year ahead of its previous target. Founder Deepinder Goyal remains optimistic about achieving this milestone, emphasizing the focus on growth over immediate profitability.
Impact on Share Price
On January 21, 2025, Zomato’s share price fell 10.16% to ₹215.4 following the disappointing Q3 results. Analysts at Macquarie predict the stock could drop further to ₹130, citing rising competition and profitability concerns.
Zomato’s Market Position and Performance
- Market Cap (as of Jan 21, 2025): ₹2,07,475 crores.
- Net profit has declined for three consecutive quarters, averaging a 48.5% decrease per quarter.
- Over the past year, Zomato has outperformed its peers but saw a 22.8% decline in share price over the last month.
Strengths
- Positive Revenue Outlook: Analysts expect double-digit revenue growth driven by increasing user adoption and higher order values.
- Improved Operational Efficiency: Working capital requirements have dropped significantly, from 191 days to 46 days, enhancing cash flow.
Weaknesses
- Losses in Quick Commerce: Blinkit incurred ₹103 crore losses in Q3 FY 2025, with further near-term losses expected as the network scales up.
- High Cash Burn: Capital expenditure for store expansion and warehouse setup continues to strain resources, despite cash reserves of ₹19,235 crores.
- Intense Competition: Rivalry in the quick-commerce segment has led to rising talent acquisition costs and compressed margins.
Outlook for Zomato and the Food Delivery Sector
Despite challenges, Zomato is poised to benefit from India’s growing online food delivery market, projected to grow at a CAGR of 10.5% by 2028. Key growth drivers include urbanization, increased smartphone penetration, and rising demand from tier-2 and tier-3 cities.
Zomato’s strategic investments in Blinkit and subscription services like Zomato Gold signal a commitment to innovation and diversification. However, achieving profitability will require optimizing costs, strengthening partnerships, and navigating regulatory challenges.
Conclusion
Zomato’s Q3 FY 2025 results highlight a pivotal phase for the company. While short-term profitability remains a concern, its long-term growth potential appears promising, supported by strategic initiatives and a strong market presence. Investors must weigh the company’s strengths against its ongoing challenges and stay informed to make confident decisions.
Disclaimer
This article is for informational purposes only and should not be considered investment advice. Investing in securities involves market risks.
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