India’s Zomato on track for best day after strong quarter

In this illustration image taken on July 14, 2021, the app of Indian food delivery company Zomato is seen on a mobile phone. REUTERS/Florence Lo/Illustration

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BENGALURU, Aug 2 (Reuters) – Shares in Indian food delivery company Zomato Ltd (ZOMT.NS) rose more than 18 percent on Tuesday and traded at No. 2 in the Ant Group-backed company (688688.SS). A record high was reached a few days later. Recorded more orders and narrowed losses in the June quarter.

The Gurgaon-based company, which operates in more than 1,000 cities and towns in India, posted a quarterly loss of 1.86 billion rupees ($23.67 million) on Monday, compared with a loss of 3.56 billion rupees last year.

Operating income rose 67% to Rs 1,414 crore in the three-month period ended June 30, mainly from its main food delivery service and fees charged to restaurants for using its platform.

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Gross order value — or the total value of all food delivery orders placed online on the Zomato platform — rose 41.6%, and the company said its food delivery segment’s adjusted EBITDA broke even in the quarter.

“We like Zomato’s long-term growth, steady market share gains, and rapid turnaround to profitability despite challenges — slower growth than the past two years, and heavy investment in Quick Commerce, no near-term profitability in sight” Morgans Danley analysts said.

The brokerage resumed coverage on the stock with an “overweight” rating and a price target of Rs 80.

The stock fell nearly 60% from its debut price a year ago and was last up 16.5% at Rs 54, rebounding from last week’s record low.

(1 USD = 78.5700 INR)

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Reporting by Rama Venkat, Nallur Sethuraman, Navamya Acharya in Bengaluru; Writing by Tanvi Mehta, Editing by Shailesh Kuber and Sherry Jacob-Phillips

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