Zomato Shares Surge on Increased Platform FeesZomato Shares Surge on Increased Platform Fees Shares of Zomato Ltd. experienced a significant increase of 4% on Monday, reaching a new record high. This surge was attributed to media reports indicating that both Zomato and Swiggy had increased their platform fees from Rs 5 to Rs 6 per order in prominent markets like Bengaluru and Delhi. Platform Fee Hike Zomato’s move to raise platform fees from Rs 4 to Rs 5 per order in April in cities such as Bengaluru, Hyderabad, Mumbai, Lucknow, and the National Capital Region has now been followed by an additional fee hike. Swiggy, an unlisted rival, is also testing a platform fee of Rs 7 in Bengaluru, although it is currently discounted to Rs 6. Quarterly Earnings Preview Elara Securities predicts that Zomato’s total revenue for the June quarter will reach Rs 3,960 crore, a 63.9% year-on-year increase. This growth is expected to be driven by continued expansion in food delivery and quick commerce (qCommerce) businesses. Despite a slowdown in May 2024 due to heat waves, delivery partner shortages in Tier I markets, and general elections impacting order volume, Zomato witnessed a resurgence in June that is projected to continue in the near future. Analysts’ Forecasts ICICI Securities estimates Zomato’s gross order value (GOV) for food delivery to increase by 22.9% year-on-year in the June quarter. Blinkit, Zomato’s high-speed commerce division, is anticipated to experience 26% growth in adjusted revenue quarter-on-quarter, or 153% year-on-year. Zomato’s adjusted revenue is projected to climb by 14% quarter-on-quarter, with an adjusted EBITDA margin of 7.9% on adjusted revenue. ICICI Securities anticipates an adjusted EBITDA of Rs 350 crore in Q1 FY25, a significant improvement over the Rs 190 crore reported in Q4 FY24. In conclusion, Zomato’s shares surged as investors reacted positively to the company’s platform fee hike and positive earnings expectations. Analysts remain optimistic about Zomato’s growth prospects in both food delivery and qCommerce segments.
Shares of Zomato Ltd surged 4% on Monday to hit a new high after media reports said that both Zomato and unlisted Swiggy had hiked their platform fees to Rs 6 per order from Rs 5 in key markets such as Bengaluru and Delhi.
Shares of the online food delivery giant rose 4% to hit a peak of Rs 232 on the BSE.
read more
In April, Zomato had already increased platform fees from Rs 4 to Rs 5 per order in cities like Bengaluru, Hyderabad, Mumbai, Lucknow and the National Capital Region.
Zomato and Swiggy initially introduced a platform fee of Rs 2 per order last year. Swiggy is also experimenting with a platform fee of Rs 7 in Bengaluru, which is currently discounted to Rs 6.
In a preview of the first quarter earnings, Elara Securities had predicted that Zomato would report total revenue of Rs 3,960 crore for the June quarter, up 63.9% year-on-year, driven by continued growth in its food delivery and quick commerce (qCommerce) businesses.
While May 2024 saw a slowdown for Zomato due to heat waves, shortage of delivery partners in Tier I markets and the general elections impacting order volume, the company saw a revival in June that is expected to continue in the near term.
ICICI Securities expects Zomato’s gross order value (GOV) for food delivery to grow 22.9% year-on-year in the June quarter. It expects average order value (AOV) for food to remain sequentially stable and increase 2% year-on-year.
Blinkit, the high-speed commerce arm of Zomato, is expected to see 26% quarter-on-quarter growth in adjusted revenue, or 153% year-on-year.
Hyperpure, Zomato’s business-to-business delivery segment, is expected to grow its adjusted revenue by 15.7% quarter-on-quarter or 78% year-on-year in Q1FY25E.
ICICI Securities expects Zomato’s adjusted revenue to grow 14% quarter-on-quarter (59% YoY), with adjusted EBITDA margin improving to 7.9% on adjusted revenue, from 5.01% in Q3FY24 and 0.4% in Q1FY24.
The brokerage forecasts adjusted EBITDA of Rs 350 crore in Q1 FY25, compared to Rs 190 crore in Q4 FY24.
Published by:
Koustav Das
Published on:
July 15, 2024
