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Zomato share price in focus as company pulls the plug on grocery delivery, Nutraceutical

Credit Suisse values food delivery business at 3.2x EV/GMV, 100% premium to DoorDash. However, it feels that worsening of unit economics is a key risk.

September 13, 2021 / 06:07 PM IST

Zomato stock price is in focus as the company has decided to pull the plug on another business - Nutraceutical.

Food tech platform Zomato will also stop its nascent grocery delivery service due to gaps in order fulfillment, poor customer experience and increasing competition from rivals that are promising express delivery in 15 minutes. The company said its investment in Grofers will generate better outcomes than its in-house grocery effort.

The company has decided to shut it at a time when the government is trying to get stricter about private label norms for marketplace businesses in the country.

Moneycontrol reported about this foray on November 10, 2020.

While the company confirmed the development, it declined to share further details.


Nutraceuticals are defined as any food-related product which provides medical or health benefits. This could range from food to beverages or even tablets with a claim of prevention or cure of chronic diseases. Following the onslaught of COVID-19, there has been a gradual rise in the adoption of healthy food among the average Indian.

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Zomato has been on a 'cleaning-up' drive since the last few weeks.

Zomato which got listed last month also reported a net loss of Rs 356 crore during the quarter ended June 30, 2021, against Rs 99.8 crore during the like period of the previous financial year.

The total income of the company stood at Rs 916 crore during the quarter under review. This was a massive jump from a revenue of Rs 283.5 crore reported in the year-ago period.

Global research firm Credit Suisse has initiated with an outperform rating on the stock with target at Rs 185 per share, an upside of 30 percent from current market price. The brokerage firm values food delivery business at 3.2x EV/GMV, 100% premium to DoorDash. However, it feels that worsening of unit economics is a key risk, according to a CNBC-TV18 report.

The stock was trading at Rs 142.65, up Rs 1.10, or 0.78 percent. It has touched an intraday high of Rs 143.80 and an intraday low of Rs 142.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Sep 13, 2021 10:35 am
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