Zomato posts Rs 176 cr profit in Q2; board nods Rs 8,500 cr fund-raise plan

Online food delivery firm Zomato Ltd on Tuesday reported a consolidated net profit of Rs 176 crore in the second quarter ended on September 30, 2024.

The board of the company, which had posted a consolidated net profit of Rs 36 crore in the same quarter last fiscal, also approved the raising of Rs 8,500 crore through qualified institutional placement of equity shares, Zomato Ltd said in a regulatory filing.

Zomato's consolidated revenue from operations stood at Rs 4,799 crore.

It was at Rs 2,848 crore in the year-ago period, it added.

Total expenses were at Rs 4,783 crore in the quarter under review against Rs 3,039 crore in the corresponding period a year ago, it said.

The company 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.

In a letter to shareholders, founder and CEO Deepinder Goyal shared that the "District" app, a new platform to consolidate going-out services such as dining, movies, sports ticketing, live performances, shopping, and staycations, "should be live in the next four weeks".

"At this point, we are focused on making sure we do a good job at migrating the business from Zomato and Paytm platforms to the new District app," Goyal stated.

With regard to the proposed fund-raise via QIP, he further clarified that the food delivery business margins continue to remain steady and there is also no plan for any minority investments or acquisition.

The fundraise is meant to strengthen our balance sheet at this point, Goyal said.

Notably, Zomato's proposed fund-raise comes at a time when rival Swiggy, in the food delivery duopoly space, is gearing up to go public with its IPO as the quick commerce battle intensifies in India.

In the letter to shareholders, the company's Chief Financial Officer Akshant Goyal shared that its cash balance "reduced by Rs 1,726 crore as compared to the previous quarter on account of the deal consideration (of Rs 2,014 crore) for the acquisition of Paytm's entertainment ticketing business".

The company's founder Goyal emphasised the need to enhance its cash balance given the competitive landscape and the much larger scale of the business.

"While the business is now generating cash (vis-a-vis a loss-making business at the time of IPO), we believe that we need to enhance our cash balance given the competitive landscape and the much larger scale of our business today," he said.