Zomato shares rise after 5% opening slide, still down close to 2%

Shares of Zomato recovered after opening with a 5% loss on the BSE on Friday, October 18. By 10:00 a.m., the stock was trading at ₹265.75, down 1.81%. This fluctuation came a day after the company announced that its board would consider raising funds through a qualified institutional placement (QIP) on October 22. Investors looking to invest in stocks are paying close attention to these developments.

Upcoming board meeting

In a recent regulatory filing, Zomato confirmed a meeting of its board of directors scheduled for Tuesday, October 22, 2024. During this meeting, the board will evaluate and accept the "raising of funds by issuance of equity shares through qualified institutional placement." This process is subject to applicable regulatory and statutory approvals, including obtaining shareholders' consent via postal ballot.

Additionally, Zomato's board plans to approve the results for the second quarter during this meeting.

Strong financial performance

Zomato reported a significant increase in its consolidated net profit, soaring to ₹253 crore for the April-June quarter of 2024-25. This represents a dramatic rise compared to ₹2 crore during the same period last year. The company's revenue from operations also surged by over 74%, reaching ₹4,206 crore, up from ₹2,416 crore in the previous year's first quarter.

However, total expenses increased to ₹4,203 crore during the quarter, compared to ₹2,612 crore a year earlier.

In a letter to shareholders, the CFO or Chief Financial Officer Akshant Goyal highlighted that gross order value (GOV) growth across Zomato's B2C businesses—food delivery, quick commerce, and dining out—accelerated by 53% year-on-year (YoY) and 14% quarter-on-quarter (QoQ), amounting to ₹15,455 crore.

Competitive landscape

Zomato shares have come under closer scrutiny, particularly as rival Swiggy prepares to launch its IPO soon. In an exclusive discussion with Moneycontrol, Zomato CEO Deepinder Goyal remarked that having multiple companies in the sector is beneficial.

However, he emphasised that Zomato remains focused on its objectives, stating, "We don't care about anything else. What's going on out there, nothing."

Key takeaways

1. Zomato shares recovered after an initial decline, trading at ₹265.75.
2. The board will meet on October 22 to discuss QIP fundraising.
3. Net profit increased to ₹253 crore, with a 74% revenue growth.
4. Total expenses rose to ₹4,203 crore.
5. Zomato continues to focus on its growth despite competitive pressures.

For those looking to invest in stocks, Zomato’s ongoing developments may present interesting opportunities.