The market capitalisation of the company is close to $10.7 billion.
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Further, the stock has been a multibagger in the last six months. Mutual funds have doubled down on their bets on Zomato and it was among the top buys of domestic fund houses in August, as they bought over 80 million shares.
Zomato reported a surprise net profit of Rs 2 crore for the June quarter, compared to a loss of Rs 186 crore in the year-ago period, and a loss of Rs 189 crore a quarter earlier. This was on the back of a 71% surge in revenue to Rs 2,416 crore.
Analysts say the strong earnings were supported by healthy revenue growth and a sharp improvement in margins.
Business to remain profitable
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The company’s robust numbers were also due to the seasonally strong fiscal first quarter, where it benefited from a “higher frequency of ordering” by subscribers of its recently relaunched loyalty programme.
The adjusted revenue (revenue from operations + delivery charges) for its food delivery business rose almost 14% sequentially in the June quarter to Rs 1,742 crore. The growth came after a few quarters of a slowdown in the food segment.
In a letter addressed to shareholders, and filed with stock exchanges, Zomato chief financial officer Akshant Goyal said the company expects its business to remain profitable going forward, and “continue to deliver 40%+” year-on-year adjusted revenue growth “for at least the next couple of years”.
“We have been working hard to make our business less complex, and putting the right people at the right spots within our businesses. These things do not have definite/measurable impact, and I can in hindsight say that most of our seemingly ‘risky’ bets have changed the trajectory of the business significantly, much faster than we expected,” said Zomato founder and chief executive Deepinder Goyal.