By Ashna Teresa Britto
BENGALURU (Reuters) -India’s Zomato reported a bigger-than-expected increase in quarterly profit on Thursday, fueled by soaring demand at its quick commerce division Blinkit and steady growth in its core food delivery business.
The company’s consolidated net profit rose to 2.53 billion rupees ($30.22 million) in the April-June quarter from 20 million rupees a year earlier, beating analysts’ estimate of a profit of 2.15 billion rupees, according to LSEG data.
App-based firms like Zomato’s Blinkit, Tata group-owned BigBasket and IPO-bound Swiggy’s Instamart have seen a rise in popularity in urban India as people increasingly opt for the convenience of ordering groceries and other home goods in to avoid heat, traffic snarls and other challenges.
Zomato bought Blinkit in 2022 for $568 million.
Blinkit’s gross order value – the total value of all orders – surged 130% in the quarter, while that at the food delivery business grew 27%. They had risen 97% and 28% respectively in the previous quarter.
Analysts at Elara Capital had expected growth of 100% and 20% in the two segments respectively.
“Despite multiple expansion plans and store additions, Blinkit has been able to improve earnings before interest, taxes, depreciation, and amortization (EBITDA) margin and move towards break-even EBITDA, so we expect potential earnings upgrades,” Elara Capital analyst Karan Taurani said, without specifying a number.
Gurugram-based Zomato also raised its platform fee by 20% in April, helping boost margins. The company warned gross order value from its food segment may see a slight fall in the near term, but will still stay above 20%.
Zomato’s revenue surged 74% to 42.06 billion rupees in the June quarter, beating analysts’ estimates of 39.28 billion rupees, per LSEG data.
It also said it was building another dining-out focused app called District, without specifying details.
Zomato’s stock closed 2% higher after it posted results, taking its year-to-date gains to 89%.
($1 = 83.7080 Indian rupees)
(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Mrigank Dhaniwala, Janane Venkatraman and Nivedita Bhattacharjee)
