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Zomato Shares Down 7% On Slow Growth In Q3Zomato Ltd fell nearly 7% on Friday after it flagged a drop in its food delivery business in its third-quarter earnings report released on Thursday.
"We have seen an industry-wide slowdown in the food delivery business since late October... this trend has been seen across the country but more so in the top eight cities," Akshant Goyal, chief financial officer said.
Zomato shares fell as much as 6.8% early on Friday, trimming losses later in the day. Shares were down 1.5% to 53.7 rupees at 11:17 a.m. IST. The stock closed marginally higher on Thursday ahead of the results.
Adjusted revenue for food delivery also declined by 1% quarter-on-quarter, largely driven by a decline in order volumes.
Gross order value - the total monetary value of orders - in the food delivery business grew a weak 0.7% quarter-on-quarter in what analysts expected to be a seasonally strong quarter.
And while average monthly transacting users declined quarter-on-quarter, average order value (AOV) rose. The rise could be "seasonality-led and hence there would be concerns on sustainability of the same," brokerage Morgan Stanley said in a note.
Zomato had said it expected to report adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter of fiscal 2024.
Adjusted EBITDA, excluding the contribution from local grocery delivery service Blinkit, briefly turned positive in January.
"Zomato turned adjusted EBITDA break-even for Jan (excluding Blinkit), a key positive," brokerage Jefferies said in a note.
The loss-making company, which went public in 2021, said its consolidated net loss widened to 3.47 billion rupees from 632 million rupees a year earlier, against analysts' expectation of 2.15 billion rupees, according to Refinitiv IBES data.
Revenue from operations, however, rose 75.2% to 19.48 billion rupees, compared with estimates of 18.14 billion rupees.
Analysts at Morgan Stanley rate Zomato stock at "overweight", Nomura at "reduce", while Jefferies at "buy", with price target between 50 and 82 rupees.
The stock fell 56.8% in 2022.
"We have seen an industry-wide slowdown in the food delivery business since late October... this trend has been seen across the country but more so in the top eight cities," Akshant Goyal, chief financial officer said.
Zomato shares fell as much as 6.8% early on Friday, trimming losses later in the day. Shares were down 1.5% to 53.7 rupees at 11:17 a.m. IST. The stock closed marginally higher on Thursday ahead of the results.
Adjusted revenue for food delivery also declined by 1% quarter-on-quarter, largely driven by a decline in order volumes.
Gross order value - the total monetary value of orders - in the food delivery business grew a weak 0.7% quarter-on-quarter in what analysts expected to be a seasonally strong quarter.
And while average monthly transacting users declined quarter-on-quarter, average order value (AOV) rose. The rise could be "seasonality-led and hence there would be concerns on sustainability of the same," brokerage Morgan Stanley said in a note.
Zomato had said it expected to report adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the second quarter of fiscal 2024.
Adjusted EBITDA, excluding the contribution from local grocery delivery service Blinkit, briefly turned positive in January.
"Zomato turned adjusted EBITDA break-even for Jan (excluding Blinkit), a key positive," brokerage Jefferies said in a note.
The loss-making company, which went public in 2021, said its consolidated net loss widened to 3.47 billion rupees from 632 million rupees a year earlier, against analysts' expectation of 2.15 billion rupees, according to Refinitiv IBES data.
Revenue from operations, however, rose 75.2% to 19.48 billion rupees, compared with estimates of 18.14 billion rupees.
Analysts at Morgan Stanley rate Zomato stock at "overweight", Nomura at "reduce", while Jefferies at "buy", with price target between 50 and 82 rupees.
The stock fell 56.8% in 2022.