Zomato's Q2 FY25 Net Profit Jumps to Rs 176 Crore, Up 389% from Last Year

Food delivery platform Zomato has released its Q2 FY25 results where the company reported a net profit of Rs 176 Crore. This is a significant jump from Rs 36 crore that was reported in the year ago quarter (September 2023).

Additionally, the company's revenue from operations increased from Rs 2,848 crore reported in the September 2023 quarter to Rs 4,799 crore in the current period.

Meanwhile, the company's board also approved a Rs 8,500 crore fundraising plan via a qualified institutional placement (QIP) of equity shares. In an exchange filing the company highlighted, "Subject to the approval of the shareholders of the Company by way of postal ballot and subject to such regulatory/statutory approvals as may be required, for raising of funds, inter alia, by issue of equity shares through qualified institutions placement(s) under applicable laws, for an aggregate consideration of up to ₹ 8,500 crore."

This will be the first fundraise of the company after the food delivery platform was listed in 2022. This fundraise is coming at a time when there has been an intense competition in the quick commerce space. Zomato's competitor Swiggy has already filed its draft IPO papers with the Securities and Exchange Board of India (Sebi). The company has a fresh issue component of Rs 3,750 crore as per its draft IPO papers. Meanwhile, quick commerce platform Zepto also reportedly raised around $4 billion in the last four months. Additionally, the company is planning to raise around $100-150 million as per reports.

Read: Zomato’s Independent Director Gunjan Soni Resigns Due to 'Increased Professional Commitments'

Meanwhile, Zomato's adjusted EBITDA increased to Rs 331 crore, up from Rs 41 crore in the same period last year. Now if we look sector-wise, the company's food order and delivery business reported an adjusted revenue of Rs 2,340 crore, indicating a 21 per cent year-on-year change.

Read: Quick Commerce Not Eating into Kirana Share, Says Zomato CEO Deepinder Goyal

Challenges in Margin Improvement

Additionally, in the quick commerce segment, the company reported an adjusted revenue of Rs 1,156 crore. This highlights a 121 per cent year-on-year growth. However, with regards to adjusted EBITDA in this segment, it is negative at (-Rs 8 crore).

Speaking about this lack of margin improvement, Zomato's Chief Financial Officer, CFO, said in an investors call, "While most of our stores today are profitable with expanding margins, we are not seeing margin expansion at aggregate level at this moment because of the investments we are making towards scaling our infrastructure. This includes not just the stores that we are adding, but also the back-end large warehouses." Goyal added that since these new stores and warehouses take a few months to ramp-up, they end up being margin dilutive during the short term.

The going out segment of Zomato has reported an adjusted revenue of Rs 154 crore. This reflects a year-on-year growth of 214 per cent. Zomato has been increasing its focus on the going out segment with the recent acquisition of Paytm's movie and ticketing segment Rs 2,048 crore. With the focus on this segment, the company is also launching a new app called 'District'. In a letter to shareholders, Zomato CEO Deepinder Goyal said, ": "The new app should be live in the next four weeks. At this point, we are focused on making sure we do a good job at migrating the business from Zomato and Paytm platforms to the new District app."

Zomato's share price closed at Rs 256.55 on the NSE today. This was a 3.44 per cent fall in share price with the previous close being at Rs 265.70.