Zomato Q2 net profit surges 389% to Rs 176 cr

Zomato has announced a big fundraising plan.

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Food delivery platform Zomato on October 22 reported 389 percent jump in net profit from Rs 36 crore in Q2FY24 to Rs 176 crore in Q2FY25. The company's revenue during the same time increased 69 percent from Rs 2,848 crore to Rs 4,799 crore as more customers ordered in, stock exchange filings showed.

On a quarterly basis, the company's operating revenues increased from Rs 4,206 crore in Q1FY25 to Rs 4,799 crore in Q2FY25.

"The business remains steady and continues to grow well," CFO Akshant Goyal told shareholders.

At 3:30 pm on October 22, Zomato's shares closed trading 3.5 percent lower at Rs 256.55 apiece. On a year-to-date (YTD) basis, Zomato's shares are up 107 percent on the NSE on the back of strong profit profile.

The company's board also approved up to Rs 8,500-crore fundraising via the issue of a qualified institutional placement (QIP) as the competitive intensity goes up. Zomato is raising additional capital despite having a strong balance sheet and the business turning in profits quarter after quarter.

Zomato's cash balance has reduced from Rs 14,400 crore in July 2021 to Rs 10,800 crore.

"While the business is now generating cash, vis-a-vis a loss making business
at the time of IPO, we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today. We believe that capital by itself does not give anyone the right to win, and that service quality is the key determinant of success, but we want to ensure that we are on a level playing field with our competitors, who continue to raise additional capital," Group CEO and co-founder Deepinder Goyal said.

Minority investments 

Zomato has also made a small investment, of Rs 6,000, into Byondnxt. Byondnxt is a B2C business which designs and manufactures innovative kitchen appliances and was set up by Eshwar Vikas, the founder of Mukunda Food Pvt Ltd, where Zomato owns around 16 percent stake on a fully diluted basis pursuant to its investment about three years ago in January 2022.

Mukunda on the other hand is a B2B business offering smart kitchen equipment to B2B customers such as restaurants, where Zomato focusses on majorly. "Zomato will
continue to stay invested in Mukunda and this share subscription does not dilute Zomato’s economic interest or rights in Mukunda. To be abundantly clear, Zomato is not looking to make any further investment in either Mukunda or Byondnxt.," the company said.