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Oct 22, 2024 04:34 PM IST
Zomato plans to raise 85 billion rupees through share issuance and aims for 2,000 stores by 2026 amid increasing competition in the food delivery market.
Food and grocery delivery firm Zomato reported a smaller-than-expected rise in second-quarter profit on Tuesday as the company added more new stores, which weighed on margins.
Its consolidated net profit rose nearly five-fold to 1.76 billion rupees ($20.94 million) in the quarter ended Sept. 30, but fell short of analysts’ estimates of 2.70 billion rupees, according to data compiled by LSEG.
The company also approved raising up to 85 billion rupees via the issue of shares in a qualified institutional placement.
Competition in India’s online food and grocery delivery sector remains tight, with rival Swiggy recently filing papers for an initial public offering, while media reports say that Zepto is eyeing a stock market debut next year.
To combat rising competition, Blinkit has been adding more stores to its network, which has hit Zomato’s profitability, analysts at Elara Capital said.
Zomato is looking to increase its store count to 2,000 by the end of 2026.
The company’s revenue rose nearly 69% to 47.99 billion rupees, slightly ahead of analysts’ estimates of 47.30 billion rupees, per data complied by LSEG.
Zomato said its results for the quarter and half year ended September 30, 2024 are not comparable with other quarters and half year results due to the acquisition of Orbgen Technologies Private Ltd (OTPL’) and Wasteland Entertainment Pvt Ltd (WEPL) holding the ‘movies ticketing’ business and events business respectively from One 97 Communications Ltd (Paytm) in August this year.
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