Profitable delivery by Zomato?

Did Zomato actually become profitable?

Zomato reported a loss Rs 15 crore before paying taxes. But here’s where things get a bit tricky. There’s a special rule in accounting called “deferred tax.” This rule added Rs 17 crore to the previous loss number. This change made the loss turn into a small profit of Rs 2 crore.

This “deferred tax” thing happens because the way companies do their books (accounting) and how they calculate taxes aren’t exactly the same. Sometimes, even if a company seems like it’s not making money in its books, it still has to pay taxes. But it can use these taxes it paid as credit in the future when things are better. This is what caused the loss to turn into a small profit for Zomato.

Now, let’s look at the money Zomato made. They said they got Rs 2,416 crore in revenues, which is a big jump of almost 71% compared to the same time last year. This growth happened because more people used their food delivery service, and their loyalty program worked well.

Last year, during the same period, Zomato was in a tougher spot. They had lost Rs 186 crore, and their revenues were Rs 1,414 crore. This means Zomato has come a long way in a year and is doing much better financially.
This improvement is quite impressive, especially when you consider that other new companies are struggling to get enough money during these tough times.

Zomato has talked about wanting to make a profit every quarter in this financial year. They also achieved something important last year: their food delivery part started making more money than it spent. 

Below are some of the strategies the company has applied:

More Money Coming In: Good News

Zomato measures how much people spend on food delivery using something called “Gross Order Value” (GOV). In the past three months, this number went up by 11%. This means that people are spending more money on Zomato. Last year, this number stayed the same at around ₹6,500 crores. But this year, it’s going up, which is a good sign that Zomato is doing better.

Same Users Ordering Food: Something to Think About

Around 17.5 million people use Zomato every month to order food. Surprisingly, this number hasn’t changed much in the last nine months. This could be a little worrying because it might mean that Zomato has already reached most of the people who would order food online. It’s like they’ve picked the easy fruit already.

Getting More order value: A Positive Sign

Zomato makes more money when people order high value food. Even though they didn’t give exact numbers about how much the food costs, they did say that the average cost has gone up a bit. Last year, it was about ₹407. This shows that people are increasing order values, which helps Zomato make more money.

People Ordering More Often: Push Notifications Work

A company named Nomura did some math and found that people are ordering food more often on Zomato. Before, they used to order about 3 times a month. Now, it’s more like 3.4 times a month. This could be because Zomato sends messages reminding people to order food. These messages seem to be working and encouraging people to order more often.

Gold Makes a Comeback: A Clever Move

Zomato has a special subscription service called “Gold” that gives extra benefits to members. They made it better and added a guarantee that your food will arrive on time. If it doesn’t, you get your money back. This new Gold program has become very popular. In just three months, 30% of the money Zomato earns from food delivery comes from Gold subscribers. This means that people really like this new Gold program.

Key Takeways:

Zomato faced challenges, but they didn’t give up. Even though the number of users hasn’t changed much, Zomato found ways to make more money from each order. The new Gold program and other smart decisions helped them earn more. This shows that Zomato is getting better at what they do, even in a tough business. As they keep learning and making good choices, they’re showing everyone how to succeed in the food delivery world.

To sum it up, Zomato’s financial report gives us a clear view of their progress in making money. Even though the tax rule might make things a bit complicated, the fact that their revenues are growing and they’re making strategic decisions shows that Zomato is on track to becoming a successful and profitable company. As Zomato keeps growing and finding new ways to do well in the competitive food delivery world, everyone will be watching to see how they continue to do.

Markets this week

Source: BSE & NSE

• The Indian market closed negatively for the second week that ended on August 4. The market exhibited a roller-coaster ride with ups and downs throughout the week.
• The week began on a positive note with a strong start. However, this positivity was short-lived.
• The market faced significant pressure during the subsequent three days. This pressure was primarily due to a downgrade in the US credit rating by Fitch. This event triggered selling by foreign investors in the Indian market.
• The market displayed volatility in response to the global development. Uncertainty influenced investor sentiment during this period.
• Despite the mid-week challenges, the market managed to recover some of its losses during the final session.
• The recovery was supported by several positive factors. These include sustained buying by Domestic Institutional Investors (DIIs).
• Robust growth in India’s service sector contributed to market resilience. This growth was a positive indicator for the overall economy.
• The surplus monsoon rainfall played a role in uplifting market sentiment. A good monsoon is seen as beneficial for various sectors of the economy.
• Earnings reports that were in line with expectations further contributed to market stabilization.
• The month of July witnessed the third-highest Goods and Services Tax (GST) collections. This achievement added a positive note to the market’s outlook

Weekly Leader Board

Source: NSE

Stocks that made the news this week:

👉State Bank of India (SBI) experienced a 3 percent decline in its stock price following the release of its earnings report for the June quarter. The bank posted a remarkable 178 percent increase in net profit, reaching Rs 16,884 crore during the April-June FY24 quarter, compared to Rs 6,068 crore in the same period last year. Market expectations were surpassed as a poll of three brokerages anticipated a 147 percent rise in net profit to Rs 15,009 crore.

👉HPCL’s stock dropped nearly 2 percent following the release of its Q1 results, along with a series of brokerage downgrades. Despite this, the state-owned oil retailer reported a standalone profit of Rs 6,203.9 crore for the quarter ending June FY24, showing a significant 92.5 percent increase compared to the previous quarter, driven by strong operational performance. Additionally, the revenue from operations stood at Rs 1,11,960.6 crore in Q1FY24, marking a 3.7 percent rise over the previous quarter’s revenue of Rs 1,07,928 crore.

👉Adani group’s Ambuja Cement is set to acquire Sanghi Cement at an enterprise valuation of Rs 6,000 crore. As part of the deal, the Adani group will invest Rs 4,500 crore to acquire the promoters’ stake and take over the company’s debt of approximately Rs 1,500 crore. The acquisition is expected to be announced soon. Sanghi Cement’s current capacity stands at 6.1 million metric tonnes per annum (mtpa), and this acquisition will aid Ambuja and its subsidiary ACC in reaching their target of 140 mtpa earlier than their initial goal of 2030. Presently, both Ambuja and ACC have a combined capacity of 70 mtpa.

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