Zomato’s Share Price Dips Over 10% as Blinkit Investment Pressures Profit Margins

New Delhi, January21, 2025: Zomato Ltd’s share price experienced a sharp decline on Tuesday, January 21, 2025, following the company’s disappointing financial results for the third quarter of the 2024-25 fiscal year. By 11:30 am, the stock had dropped 10.44%, shedding ₹25.15 to trade at ₹215.80 on the Bombay Stock Exchange (BSE). The lowest intraday price during that time was ₹210.15.

The plummet in Zomato’s share price comes in the wake of the company announcing its third-quarter results for the 2024-25 fiscal year on Monday, January 20, 2025. Despite significant growth in its consolidated revenue, the company’s net profit showed a worrying decline. Zomato’s net profit for the quarter fell to ₹59 crore, marking a steep drop of 57.24% from ₹79 crore in the same period last year. This decline was particularly concerning given the impressive increase in revenue from operations, which rose 64.38% to ₹5,405 crore from ₹3,288 crore year-on-year.

However, the company’s total expenses also surged by 63.55%, climbing to ₹5,533 crore from ₹3,383 crore in the previous year. This increase in spending was driven largely by Zomato’s significant investments in its quick commerce arm, Blinkit. Blinkit’s revenues grew impressively by 117.23%, reaching ₹1,399 crore from ₹644 crore in the same quarter last year. However, the heavy investment in Blinkit to boost its expansion has strained Zomato’s profit margins. This expansion comes as Zomato faces fierce competition in the quick commerce market from rivals like Zepto, Swiggy’s Instamart, Tata’s BigBasket, and Flipkart’s Minutes, which are all vying for market dominance.

The timing of Zomato’s disappointing results also coincides with a broader downturn in the Indian stock market. On the same day, the benchmark BSE Sensex witnessed a significant drop, losing 778.51 points or 1.01%, to settle at 76,294.93. Meanwhile, the NSE Nifty fell by 189.10 points or 0.81%, reaching 23,155.65, reflecting the broader negative sentiment in the market.

Zomato had recently joined the ranks of the 30 stocks listed on the BSE Sensex, a milestone that had initially raised investor optimism about the company’s future prospects. However, with these latest results and ongoing challenges in its investments, the company’s stock price has taken a hit. Despite its impressive revenue growth, the company’s inability to turn a profit due to increased expenses and competition from rival quick-commerce players is putting pressure on its market position.

The company’s investors are now watching closely to see how Zomato plans to manage its investments in Blinkit, especially as the competitive landscape in the quick commerce sector continues to intensify. With Blinkit’s strong revenue growth, Zomato’s long-term strategy to dominate the sector remains a key factor in determining the company’s future stock performance.

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