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Zomato Q4FY23 results – Growth and profitability dilemma continues
Mumbai: Zomato has reported muted revenue growth of 22.6 per cent YoY in the food business this quarter, as MTU’s decline 4.6 per cent QoQ due to 1) initiative of Zomato Gold and 2) shut down in 225 cities; in terms of GOV, the growth was mere 12.2 per cent YoY (MTU growth of 5.7 per cent YoY), due to inflationary pressure impacting overall delivery revenue.
AOV and delivery charges remain flat, as order volume was more driven by new user acquisition and increased frequency; respite for profitability continues on the back of lower discounts, which had the biggest impact for moving contribution margin 70bp higher QoQ to 5.8 per cent in the food segment. The management maintains their guidance of 4-5 per cent of EBITDA as a percentage of GOV in the food business over medium term, however, there may be pressure on revenue growth rates too, to keep AOV under check and drive higher frequency within the existing customer base, rather than spend more on discounts/new customer acquisition.
We believe food GOV growth rates will come closer towards 15-20 per cent over the near term, whereas food revenue growth rates could be towards 20 per cent-22 per cent driven by better take rates.
We continue to believe that initiativesl like ONDC and direct ordering platforms won’t disrupt Zomato’s business model as unit economics are not favourable for restaurants due to lower AOV and higher delivery costs; however, it may keep take rates stable for most chains, restaurants that have a higher AOV vs average (Rs 400); we may also see a scenario of take rates being linked to AOV, as latter will lead to savings (lower take rates) for restaurants.
Quick commerce segment continues to report robust GOV growth (17 per cent QoQ in Q4FY23) with an improved margin profile, but concerns persist on the same due to low scale potential, as launching the offering in more cities could negatively impact AOV and eventually potential unit economics; reduction in losses is a key monitorable for this segment as concerns in the form of higher competitive intensity and discounts persist.
Zomato is currently trading at 39x FY25 EV/EBITDA (core food delivery segment), after factoring a 18 per cent growth in the food GOV, and 3 per cent EBITDA margin as a percentage of GOV; however, including losses of Blinkit (estimated to be in the range of INR 2.75bn in FY25), valuations for Zomato are high at 52x FY25 EV/EBITDA (consolidated business including quick commerce). The stock has already moved up 30 per cent over the last 3M and is trading at fair valuations, offering limited upside in the near term.
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Axis Bank named Official Banking Partner of DP World PGTI
Partnership supports all tournaments this season to grow professional golf in India.
MUMBAI: Axis Bank just teed up a hole-in-one partnership because when a bank sponsors golf’s biggest swing in India, even the fairways feel more financially secure. Axis Bank has been appointed Official Banking Partner of the DP World Professional Golf Tour of India (DP World PGTI), strengthening its commitment to sporting excellence and community engagement while backing the growth of professional golf across the country.
Under the partnership, Axis Bank will support all DP World PGTI tournaments this season, contributing to talent development, enhanced tournament experiences and wider fan engagement. The collaboration aligns the bank’s values of precision, discipline and trust with the Tour’s focus on performance and opportunity.
Axis Bank executive director Munish Sharda said, “We are pleased to partner with DP World PGTI as its Official Banking Partner. Golf embodies precision, discipline, and a pursuit of excellence qualities that strongly reflect who we are at Axis Bank. This association also strengthens our engagement with India’s growing premium customer segments, where the sport has a deep and enduring connect.”
Professional Golf Tour of India president Kapil Dev said, “We are extremely pleased to welcome Axis Bank as a Tour Partner of the DP World Professional Golf Tour of India. Partnerships of this stature play a vital role in strengthening the foundation of the Tour, enhancing opportunities for our players, and expanding the sport’s reach across the country.”
Professional Golf Tour of India CEO Amandeep Johl added, “Axis Bank’s strong legacy of excellence, innovation, and nationwide reach aligns perfectly with DP World PGTI’s goal to elevate professional golf in India and provide greater opportunities for our players.”
In a sport where every stroke counts and every partnership drives distance, Axis Bank isn’t just backing golfers, it’s investing in the fairway to future, turning India’s greens into a stage where precision meets passion and every drive has the power to inspire.
