Zomato's share price plunged to a low on Tuesday since nearly six months after weak Q3 FY25 earnings. The online food delivery giant's stock marked the lowest price since July 23, 2024 as it dropped 13.33 per cent to Rs 207.80 per share.
At 12:52 p.m., shares of Zomato traded 8.88 per cent lower at Rs 218.40. The decline comes when the broader Nifty 50 index rose marginally by 0.31 per cent.
The stock price of Zomato (NSE:ZOMT) is down due to the higher investment made by the company in Blinkit, its quick-commerce business.
Blinkit, which delivers groceries and other essentials, is growing rapidly, and Zomato has been focusing its resources on this growth. As a result, the company's profitability is expected to remain low in both the current and next financial year.
Zomato's profits in its third quarter for December 2024 were eroded by Blinkit's growth plan. The company is investing so heavily in Blinkit's growth that most analysts and brokerages have reduced their earnings estimates for Zomato and cut their target prices on Zomato's stock.
The online food delivery company reported a 57 per cent fall in net profit year-on-year at Rs 59 crore for the third quarter of FY25, from Rs 176 crore in the same period last fiscal.
The company's operational revenue was up 64 per cent to Rs 5,404 crore in Q3, from Rs 3,288 crore in the same period last year.
According to Zomato, the founder, and CEO of the company said that losses recorded in the quarter of quick commerce business are as much due to taking forward the investments in the business that we otherwise would have undertaken at a staggered pace over next few quarters.
He further stated that it seems like “we will get to our target of 2,000 stores by December 2025, much earlier than our previous guidance of December 2026”.
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