Indian food delivery firm Zomato jumps as Q2 revenue doubles

·2-min read
FILE PHOTO: Illustration picture of Indian food delivery company Zomato

BENGALURU (Reuters) -Shares of Indian food aggregator Zomato Ltd jumped as much as 5.8% on Thursday, as investors looked past a wider quarterly loss to focus on its robust revenue buoyed by a strong food delivery business and a rebound in the restaurant sector.

The Gurugram-based company, which generates most of its revenue from food delivery and related fees it charges restaurants for using its platform, said revenue from operations jumped 140.2% to 10.24 billion rupees ($137.76 million) for the three months to Sept. 30.

The company's consolidated net loss, however, ballooned nearly 87% to 4.30 billion rupees from a loss of 2.30 billion rupees a year earlier.

Zomato attributed its losses to a rise in branding and marketing expenses, expansion into smaller towns and increased delivery costs on rising fuel prices.

The increased expenses on branding and marketing paid off, Zomato said, as its platform's gross order value grew by 158% to 54.1 billion rupees from a year earlier, driven by more transacting users.

The company said delivery cost per order rose by 5 rupees in the second-quarter compared to the first, on account of an extended rainy season and a sharp increase in fuel prices.

Zomato also upped its focus on the hyperlocal and quick-commerce segments, announcing investments in logistics-tech firm Shiprocket and savings and neighbourhood discovery app Magicpin.

It added it will invest $1 billion more over the next 1-2 years, with a large chunk likely going into quick-commerce - the under-30-minutes products delivery space.

Analysts at Jefferies retained their "buy" rating and said Zomato's gross order value growth was a "big positive" but "comes at the cost of profitability".

The company has also planned investment in fitness firm CureFit.

By 0430 GMT, Zomato shares erased some gains and were up about 3.3%.

($1 = 74.3325 Indian rupees)

(Reporting by Vishwadha Chander and Nallur Sethuraman in Bengaluru; Editing by Shailesh Kuber and Rashmi Aich)

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