Zomato's share hits 6-month low amid Blinkit's expansion plans

Mumbai, Jan 21 (IANS) Zomato’s share price dropped to its lowest point on Tuesday in nearly six months, following weak Q3 FY25 earnings.

The online food delivery giant's stock marked the lowest price since July 23, 2024 as it dropped 13.33 per cent to Rs 207.80 per share.

As of 12:52 p.m., Zomato’s shares were trading 8.88 per cent lower at Rs 218.40. This decline comes even as the broader Nifty 50 index saw a small rise of 0.31 per cent.

The drop in Zomato's stock price is linked to the company's increased investment in Blinkit, its quick-commerce business.

Blinkit, which delivers groceries and other essentials, is expanding rapidly, and Zomato has been focusing its resources on this growth. As a result, the company’s profitability is expected to remain low in both the current and next financial year.

In its third-quarter results for December 2024, Zomato’s profits were impacted by Blinkit’s expansion plans. The company is investing heavily in Blinkit’s growth, which has led most analysts and brokerages to lower their earnings estimates and reduce their target prices for Zomato’s stock.

The online food delivery company on Monday reported a 57 per cent decline in net profit (year-on-year) at Rs 59 crore in the third quarter (Q3) of FY25 -- from Rs 176 crore in the same period last fiscal.

The operational revenue went up by 64 per cent to Rs 5,404 crore in Q3, from Rs 3,288 crore in the same period last year.

Deepinder Goyal, Founder and CEO of Zomato, said that losses in the quick commerce business this quarter are largely on account of pulling forward the growth investments in the business that we would have otherwise made in a staggered manner over the next few quarters.

He further stated that it seems like “we will get to our target of 2,000 stores by December 2025, much earlier than our previous guidance of December 2026”.

--IANS

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