Zomato Q2 Results Review - Strong Beat; Challenges Overcome To Deliver Positive Surprises: Dolat Capital

Dolat Capital Report

Zomato Ltd. reported revenue growth of 18% QoQ (our estimate: +1%), at Rs. 28.5 billion. Food delivery business topline growth remained robust, growing 12.7% QoQ, Hyper pure and Quick Commerce grew 21%/32% QoQ respectively. 

For food delivery, gross order value was up 9% QoQ, while monthly transacting users increased by 5.1%, leading to adjusted revenue of Rs. 19.3 billion, up 10.5% QoQ.

Zomato reiterated overall revenue growth of 40% + for next couple of years, led by superior growth performance from Blinkit with, continued improved economics. 

Ebitda margin loss narrowed further to 1.7% (our estimate: +2%) from -2% in Q1. Higher implied food delivery charges (due to Gold) and Sales promotion (in food delivery as well as Blinkit led to miss. 

Robust performance and commentary in Q2 has led to significant uptick in our forecasts but nevertheless we continue to mark the growth way below guided rate given past volatility, and would rather wait to see current traction sustaining.

Maintain our 'Sell' rating with discounted cash flow based target price of Rs 80.

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