Zomato, a leading player in India’s food delivery market, has reported a notable drop in profits for the third quarter of FY25, ending December 31, 2024. The company’s net profit declined by 57% year-on-year, falling to ₹59 crore compared to ₹138 crore in the same quarter last year. This decline is largely attributed to rising competition and increased investments in expanding its quick-commerce business, Blinkit.
Key Financial Metrics
- Revenue Surge
Despite the profit slump, Zomato’s consolidated revenue grew by an impressive 64%, reaching ₹5,405 crore compared to ₹3,288 crore in the same period last year. This was fueled by increased consumer spending during festive seasons such as Christmas and Deepavali. - Rising Expenses
Total expenses for the quarter rose significantly to ₹5,533 crore from ₹3,383 crore in the same period last year. This reflects Zomato’s efforts to scale operations and implement marketing initiatives. - Blinkit’s Impact
Zomato’s quick-commerce platform, Blinkit, contributed to the company’s growing expenses. The segment reported an adjusted EBITDA loss of ₹1.03 billion, compared to ₹890 million in the same period last year. Despite an increase in order volumes, competition from platforms such as Swiggy’s Instamart, Zepto, Flipkart, and BigBasket continues to pose challenges.
Stock Market Reaction
Following the announcement of the results, Zomato’s shares fell sharply. The stock dropped by over 9%, trading at ₹218.05 as of January 21, 2025. This decline reflects investor concerns over the company’s mounting expenses and Blinkit’s persistent losses.
Analyst Views
Market experts have adopted a cautious outlook on Zomato’s profitability in the near term. While revenue growth has been strong, sustained investments in Blinkit and infrastructure expansion are likely to weigh on the company’s margins. Analysts believe that achieving profitability in the quick-commerce segment will be a long-term endeavor given the competitive landscape.
Conclusion
Zomato’s Q3 FY25 results highlight the challenge of balancing growth and profitability. While the company is making strategic investments to expand its footprint in the quick-commerce space, the costs associated with these efforts are impacting its bottom line. Zomato’s ability to effectively navigate this period of heightened competition will be critical for maintaining shareholder confidence and ensuring long-term success.
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