Zomato Shares Climb Ahead Of Q1 Earnings: Why Analysts Expect Bumper Quarter

Food delivery giant Zomato‘s share price was climbing ahead of results on Thursday as the company is anticipated to extend its recent strong earnings performance into the June quarter, driven by robust results across its businesses.

Zomato is set to announce its first-quarter results later on Thursday.

Revenue for the first quarter is projected to increase by 62% year-on-year, based on an average estimate from brokerages covering the stock, with net profit expected to rise mutifold.

The food delivery business revenue is forecast to grow by 35% year-on-year, while the Hyperpure business revenue may jump by 65% year-on-year. Blinkit, the quick-commerce arm, is set to improve its earnings by reducing losses and significantly increasing order volumes.

Analyst Expectations: JM Financial predicts gross order value (GOV) in food delivery to grow 25% year on year. The brokerage expects take rates to rise to 20.8% in Q1 FY25 from 20.6% in Q4 FY24.

It anticipates adjusted EBITDA margin, as a percentage of average order value, to expand by 30 basis points sequentially. For Blinkit, it forecasts a sequential GOV growth of 22%, driven by a 20% increase in order volumes.

At a consolidated level, factoring in an ESOP cost of ₹175 crore versus ₹161 crore last quarter, the research firm expects reported EBITDA and profit after tax to grow to ₹168 crore and ₹223 crore, respectively.

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Kotak Equities expects Q1 revenue to be 59% higher than a year ago, driven by a 35% growth in food delivery revenues, 65% growth in Hyperpure revenues and a 125% growth in Blinkit revenues.

The domestic brokerage expects a 20 basis points quarter-on-quarter expansion in food delivery contribution margin to 7.7% in Q1, which, coupled with a gross merchandise value (GMV) increase, will result in a 3.7% EBITDA margin as a percentage of GMV for this segment. It expects a minor sequential reduction in loss for the Blinkit business, though it does not anticipate an EBITDA break-even yet due to the addition of over 100 dark stores, which may impact profitability.

Analysts at Nuvama expect Zomato to post a strong growth in the quarter, pegging revenue growth at 64.4% year on year. Specifically, it expects adjusted revenue from the food delivery business to grow 23.9% from a year ago, while Blinkit’s revenue is forecast to grow 29%.

On the other hand, domestic brokerage Elara Capital estimates that Zomato will achieve an overall revenue of ₹3,960 crore in Q1FY25, marking a major 63.9% year-on-year growth.

Equirus Securities expects a 6% quarter-on-quarter GOV growth in food delivery and a strong 14% sequential GOV growth in Blinkit. It foresees sequential adjusted EBITDA margin improvement in food delivery and Blinkit to be 29 basis points and 99 basis points, respectively.

Watch Out For: Key areas to monitor include market share changes in the food delivery business, quarter-over-quarter monthly transacting users and order volume growth in food delivery, customer delivery charges expansion in food delivery and net dark store additions for Blinkit.

Price Action: Zomato’s share price was trading 1.56% higher at ₹233.04 ahead of results on Thursday.

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