Zomato Reports 389% Surge in Net Profit for Q2FY25, Plans ₹8,500 Crore Fundraise to Fuel Future Growth
Zomato, one of India’s leading food delivery platforms, reported an impressive 389 percent increase in net profit for the second quarter of the fiscal year 2025 (Q2FY25), soaring from ₹36 crore in Q2FY24 to ₹176 crore in Q2FY25. This significant profit boost reflects the company’s ability to attract more customers and grow its operations effectively. Alongside this profit surge, Zomato’s revenue also saw substantial growth, jumping 69 percent from ₹2,848 crore in Q2FY24 to ₹4,799 crore in Q2FY25. This increase was driven by the growing number of customers using the platform to order food, as shown in the company’s filings with the stock exchange.
On a quarter-over-quarter basis, Zomato’s performance remained strong. In Q1FY25, the company reported operating revenues of ₹4,206 crore, which then increased to ₹4,799 crore in Q2FY25, highlighting continued momentum in its business operations. The consistent growth in both profits and revenues suggests Zomato’s ability to sustain its position in a competitive market.
Akshant Goyal, Zomato’s Chief Financial Officer, expressed confidence in the company’s performance, stating, “The business remains steady and continues to grow well.” This positive outlook signals that Zomato is on a stable growth trajectory, continuing to capture a larger share of the food delivery market in India.
Despite the strong financial results, Zomato’s stock experienced a 3.5 percent dip in trading on October 22, closing at ₹256.55 per share. This decline in stock price could be attributed to market fluctuations or investor reactions to broader economic factors. However, on a year-to-date (YTD) basis, Zomato’s shares have performed exceptionally well, climbing 107 percent on the National Stock Exchange (NSE). This surge in stock value reflects investor confidence in the company’s long-term profitability and its strong financial profile.
One of the most noteworthy decisions made by Zomato’s board during this period was the approval to raise up to ₹8,500 crore through a qualified institutional placement (QIP). This fundraising initiative comes at a time when competition in the food delivery sector is intensifying, and companies are increasingly looking for ways to bolster their financial resources. Although Zomato has been reporting consistent profits and boasts a strong balance sheet, this capital infusion will provide the company with additional resources to maintain its competitive edge, invest in new growth opportunities, and potentially expand its operations.
Zomato’s decision to raise funds through a QIP also demonstrates its strategic foresight in preparing for future challenges. The food delivery industry is fiercely competitive, with players like Swiggy and other international platforms continuously vying for market share. By raising additional capital, Zomato can ensure it has the financial strength to withstand market pressures, invest in technology, enhance its services, and potentially explore new avenues for growth, such as expanding its delivery network or exploring new business models.
However, alongside its impressive growth, Zomato has seen a decrease in its cash balance. In July 2021, the company held ₹14,400 crore in cash reserves, which have since reduced to ₹10,800 crore. While this reduction in cash reserves may raise concerns for some investors, it is important to note that Zomato has been investing heavily in its operations, technology, and delivery infrastructure to support its rapid expansion. The decline in cash reserves could also be attributed to strategic investments aimed at enhancing customer experience and increasing operational efficiency.
The food delivery market in India is undergoing a transformation, with companies like Zomato capitalizing on changing consumer behaviors. As more people opt for the convenience of food delivery, platforms like Zomato have become an integral part of the Indian dining culture. The growth in Zomato’s revenue and profits is a reflection of this shift, as the company continues to attract a growing customer base while improving its service offerings.
Moreover, the decision to raise funds via a QIP highlights Zomato’s focus on long-term sustainability and growth. While it already has a robust financial position, this capital raise will likely strengthen its ability to compete, innovate, and maintain its leadership in the food delivery industry. Zomato’s continued focus on profitability, coupled with strategic capital management, positions the company to thrive in the evolving market landscape.
In conclusion, Zomato’s Q2FY25 results underline its significant growth in both profits and revenues, with a 389 percent jump in net profit and a 69 percent increase in revenue compared to the previous year. The company’s ability to navigate competitive pressures, invest in its future, and maintain a strong financial profile reflects its resilience and adaptability in a highly competitive market. While its stock price experienced a brief dip, the year-to-date performance shows strong investor confidence. With the approval of an ₹8,500 crore QIP, Zomato is well-positioned to continue its upward trajectory and maintain its dominance in India’s food delivery sector.