Zomato shares were surging nearly 10% to fresh all-time highs in early trade on Friday after the food delivery firm’s net profit shot up over 126 times in the first quarter of the financial year.

What Happened: The food delivery platform posted a net profit of ₹253 crore in the quarter ended June 30, up from the ₹2 crore it had earned a year earlier, beating analyst expectations of ₹208 crore. It was also a 44.6% increase from the ₹175 crore it made in the fourth quarter of FY24.

The company’s revenue figure came in at ₹4,206 crore, which was 74% higher than what it posted in the same quarter last year, exceeding street expectations of ₹3,913 crore. Sequentially, the topline number grew 18%.

Quick-commerce arm Blinkit’s revenue shot up to ₹942 crore, and adjusted EBITDA for the segment was close to breakeven, with an EBITDA loss of just ₹3 crore for the quarter, narrowing from a loss of ₹37 crore in the fourth quarter.

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The company said Blinkit aims to get to 2,000 stores, latest by the end of 2026 while remaining profitable.

Quick commerce’s gross order value (GOV) went up to ₹4,923 crore versus ₹4,027 crore in the preceding quarter. Meanwhile, its contribution margin as a percentage of GOV inched up to 4% from 3.9% quarter on quarter.

Meanwhile, the food delivery segment added ₹1,942 crore to the topline, up from ₹1,739 crore quarter-on-quarter. GOV climbed to ₹9,264 crore from ₹8,439 crore in Q4, while contribution margin shrank 20 basis points to 7.3%. The company acknowledged the dip and said it expects minor fluctuations to continue going forward as well, driven by seasonality and multiple other factors.

While the adjusted EBITDA margin in food delivery stood at 3.4%, The company said it remains on track to hit 4%-5%.

Brokerage Reactions: CLSA increased its earnings estimates for Zomato by 6% to 36% for the financial years 2025 to 2027, expecting an improved performance from Blinkit despite a rapid increase in dark stores. It gave the stock an “outperform” rating and a target price of ₹350.

Motilal Oswal has set a price target of ₹300 for Zomato with a “buy” call. The brokerage noted that Blinkit presents a unique opportunity to disrupt industries such as retail, grocery and e-commerce. The brokerage expects Zomato to report margins of 4% in FY2025 and 8.7% in FY2026, acknowledging the difficulty in valuing Blinkit accurately.

Morgan Stanley has maintained its “overweight” rating on Zomato, raising its price target to ₹278 from ₹235. The brokerage believes Zomato’s goals of achieving over 20% growth in food delivery, reaching 2,000 stores by the end of 2026 in quick commerce, and launching a new app for the “going out” segment signal strong revenue growth momentum.

Nomura has revised its price target for Zomato to ₹280 from ₹225, along with a “buy” recommendation. The brokerage sees significant growth potential in both food delivery and quick commerce, driven by Zomato’s high growth trajectory and improving profitability.

Citi described Zomato’s results as a “stellar quarter,” retaining its “buy” rating and raising its price target to ₹280 from ₹235.

Jefferies believes Blinkit’s plan to reach 2,000 stores could introduce some profitability volatility but still maintained a “buy” rating with a price target of ₹275, up from ₹230.

Bernstein called Zomato a “core internet holding,” maintaining its “outperform” recommendation with a price target of ₹275, up from ₹230.

Price Action: Zomato’s share price rocketed nearly 10% at the start of trade on Friday before easing slightly to be up 8.73% at ₹254.52 in early trade. The stock has more than doubled in value so far this year.

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