Zomato’s share price fell by 6% in early trade on Tuesday following the company’s announcement of its Q4 results. Zomato shares dropped as much as 5.98% to ₹182.10 each on the BSE.

The food delivery platform Zomato reported a consolidated net profit of ₹175 crore in the fourth quarter of FY24, compared to a loss of ₹188 crore in the same period a year ago. This marks a 27% growth in net profit from ₹138 crore posted in the December quarter.

In Q4FY24, Zomato’s revenue from operations surged by 73% to ₹3,562 crore from ₹2,056 crore, YoY. The Gross Order Value (GOV) for the March quarter witnessed a significant rise across B2C businesses, increasing by 51% YoY to ₹13,536 crore.

At the operating level, the company achieved an EBITDA of ₹86 crore, marking a notable improvement from the loss of ₹226 crore incurred during the same period last year.

Zomato’s quick-commerce arm, Blinkit, attained operational EBITDA break-even in March 2024.

Analysts reaffirmed their optimistic outlook on Zomato shares, with some increasing their target price for the stock, driven by the sustained strong performance of Blinkit.

Here’s the commentary from analysts regarding Zomato’s Q4 results and its share price:

Emkay Global Financial Services observed that Zomato delivered consistent operational performance, surpassing revenue expectations, while the margin deviation was attributed to higher-than-anticipated ESOP expenses.

The brokerage largely maintained its FY26E earnings per share (EPS) projections but reduced FY25E EPS by approximately 20%. This adjustment reflects the anticipated slower profitability for Blinkit due to its ambitious store expansion strategy and increased ESOP expenditures.

They upheld a ‘Buy’ rating, setting a Zomato share price target of ₹230 per share on a sum-of-the-parts (SOTP) basis. This valuation comprised valuing the food delivery segment at ₹121 per share (DCF basis), Blinkit at ₹93 per share (DCF basis), and cash & other investments at ₹17 per share (BV).

Nuvama Institutional Equities noted that Blinkit intends to increase its dark store count from 525 in Q4FY24 to 1000 by the end of FY25. While this move may affect short-term profitability, it solidifies Blinkit’s position as the predominant player in quick commerce.

The valuation of Zomato is conducted using a sum-of-the-parts (SOTP) approach, with the food delivery segment valued at $10 billion and Blinkit at $13 billion. The upgrade in valuation was attributed to the accelerated growth and established leadership of Blinkit in the quick commerce sector.

Nuvama Institutional Equities reiterated their ‘Buy’ rating on Zomato shares and increased the target price to ₹245 per share, up from ₹180 previously.

Elara Capital reiterated its positive outlook on Zomato, emphasizing its strong position in the food business and the potential for continued growth. They anticipate an adjusted EBITDA compound annual growth rate (CAGR) of 47% for FY24-26E, supported by Blinkit’s market leadership and superior execution, including improved customer experience compared to competitors.

The firm has revised its consolidated revenue estimates upward by 22% for FY25E and 33% for FY26E, driven by robust growth projections for Blinkit and Hyperpure. However, the upgrade in consolidated earnings estimates for FY25E and FY26E is modest at 7% and 3% respectively, primarily due to higher ESOP charges and lower EBITDA for Blinkit, which is focused on expansion.

The brokerage reiterated its ‘Buy’ rating on Zomato shares and increased the price target to ₹280 per share from ₹250 previously.

As of 9:20 am, Zomato shares were trading at ₹184.10 apiece on the BSE, marking a decrease of 4.96% from the previous close.