Zomato Q2 Results Review - Profitability Comes At The Cost Of Growth: ICICI Securities
The company's food delivery gross order value grew 3.1% QoQ and 22.6% YoY in Q2 FY23.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
Zomato Ltd.’s food delivery gross order value grew 3.1% QoQ and 22.6% YoY in Q2 FY23. This is meaningfully lower than the gross order value trajectory over the last four quarters (Q1 FY23 gross order value grew 9.9% QoQ and 41.6% YoY).
We believe this was a result of focus on profitability. Food delivery business contribution to gross order value improved to 4.5% in Q2 FY23 (up 170 bps QoQ).
Adjusted revenue (food delivery) grew 7.6% QoQ and 26.5% YoY. Food delivery business reported breakeven (post restatements) in Q2 FY23 after adjusting for what was previously classified as unallocated expenses.
Zomato clarified that the target for adjusted Ebitda is 4-5% of gross order value which roughly translates to a segmental Ebitda margin in the range of 15-20% (our estimate). This, we think, is lower than consensus estimates. The management has also guided for slower improvement in contribution going ahead as most ‘low hanging fruits’ have been pocketed.
Click on the attachment to read the full report:
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.