Zomato has drawn significant investor attention in recent years, delivering impressive returns of over 120% in the past year alone. While its performance has been stellar, the key question remains: is it worth buying at current valuations? Let’s dive into its current fundamentals to find out.
Before diving into the fundamentals, Do check out our “Zomato Journey: Losses to Sensex” article to find out Zomato’s financial journey which helped the stock to move into the Sensex.
Zomato Stock Performance Overview
After a successful IPO launch in the second half of 2021, the stock soared, rallying upward until the year’s end. However, the momentum faded as 2022 began. The stock faced consistent selling pressure throughout the year and hit an all-time low of ₹40 in July. So, when did the turnaround happen?
The stock caught investors’ attention when the food delivery company started showing steady growth in its quarterly results during FY23. Since then, it has been on an impressive upward journey, gaining over 485% to date. But is it the right time to invest? Let’s dive into Zomato’s fundamentals to find out!
Key-Takeaways
- Zomato’s 3 years Sales CAGR is at 82%! While Profit 3 years CAGR is at 34%
- Company turned into profits for the first time in FY24.
- Company has positive cash flow
- in first half of FY25, Zomato’s revenue and profit has seen growth
- Company is Debt Free.
- stock has given more than 120% return in 1 year, But the P/E is at 367(x)
Annual Zomato Fundamentals:
Revenue from Operations
Growth Over the Years (Cr)
No Data Found
*Note:- TTM = Numbers since FY 23
Net Profit
Growth Over the Years (Cr)
No Data Found
Zomato’s fate changed after the lockdown, and we can see that the company’s finances have been growing continuously over the years. From Rs 1994 Cr in March 2021, the company’s Revenue from Operations increased by more than 500% to Rs 12,114 Cr in FY24. Also, the company turned its book into green numbers in FY24 to Rs 351 Crores after posting losses over the years.
During the first half of FY25, the company’s growth has shown no signs of any slowdown, further reinforcing the company’s strong performance. The consistent growth in revenue and the shift to profitability highlight the company’s solid fundamentals and its ability to navigate a competitive market effectively.
Zomato’s Annual Profit and Loss Statement
| Particular | FY 21 | FY 22 | FY 23 | FY 24 |
|---|---|---|---|---|
| Revenue | 1,994 | 4,192 | 7,079 | 12,114 |
| Revenue Growth | -23% | 110% | 69% | 71% |
| Operating Expenses | 2,461 | 6,043 | 8,290 | 12,071 |
| Ope.Expenses Growth | -50% | 146% | 37% | 46% |
| EBIDTA | -467 | -1,851 | -1,210 | 42 |
| Other Income (+) | 125 | 495 | 682 | 847 |
| Depreciation (-) | 138 | 150 | 437 | 526 |
| Interest (-) | 10 | 12 | 49 | 72 |
| Exceptional Item | -325 | +297 | 0.1 | – |
| Tax | -1.3 | -2 | 44 | 60 |
| Net Profit | -816 | -1,223 | -971 | 351 |
The table shows how Zomato’s revenue is growing much faster than its expenses, helping it reduce losses and turn profitable. This trend has also improved its EBITDA, showing better financial health.
Now that we’ve seen Zomato’s progress over the years, let’s take a look at the cash flow statement.
Cash Flow Statement of Zomato
| Particular | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|
| Operating Activities | -1,017 | -693 | -844 | 646 |
| Investing Activities | -5,243 | -7,937 | 457 | -347 |
| Financing Activities | 6,401 | 8,749 | -127 | -207 |
| Other Activities | -1 | -33 | 339 | -1 |
| Net Cash Flow | 139 | 85 | -174 | 91 |
The company’s positive cash flow is a strong indicator of its financial health. It has generated Rs. 646 crores through operating activities, demonstrating that cash inflows exceed outflows—a key sign of sustainable growth.
While the financial statements reflect the company’s strong performance, it is also important to evaluate how efficiently the company is utilizing its assets and capital. This can be better understood through an analysis of key financial ratios.
Ratios
Margin Ratios
Zomato’s operating and net profit margins showcase a significant turnaround:
Operating Margin
From FY21-FY24
No Data Found
Net Profit Margin
From FY21-FY24
No Data Found
The Margins are clearly displaying the increase in the companies efficiency, Indicating the company is managing its expenses in well manner if compared to the revenue it is generating.
In FY24, the operating profit and net profit margins both reached 3%, a significant turnaround from the negative margins of -13.64% and -13.71%, respectively, in previous years.
Return Ratios
The return ratios further underline Zomato’s efficient utilization of capital and assets:
Return on Equity (%)
From FY21-FY24
No Data Found
Return on Capital Employed (%)
From FY21-FY24
No Data Found
Return on Assets(%)
From FY21-FY24
No Data Found
The return ratios are suggesting that the company is using its capital and assets efficiently. the RoE and RoCE stood at 1.71 and% and 1.70% respectively.
Other Ratios
| Particular | FY22 | FY23 | FY24 |
|---|---|---|---|
| Current Ratio (x) | 10.60 | 7.52 | 2.62 |
| Quick Ratio (x) | 10.55 | 7.46 | 2.58 |
| Debt/ Equity(x) | 0 | 0 | 0 |
Although the current ratio has declined over the years, it remains above the critical threshold of 1x, indicating the company’s ability to meet short-term obligations. The Debt/Equity ratio has consistently remained at zero, reflecting Zomato’s debt-free position—a favorable sign for long-term sustainability.
Annual Performance Conclusion
Zomato’s financial statements show consistent growth and resilience. The Zomato’s fundamentals have strengthened significantly from turning profitable in FY24 to maintaining positive cash flows and improving margins.
With its annual performance showing good progress, the quarterly performance will tell us how the company is performing in recent times.
Zomato Recent Fundamentals
We have the company’s strong growth over the years, But how has Zomato performed recently? Let us find out.
Zomato’s Quarterly Revenue and Profit Growth
| FY25 Q1 | Change % YoY | FY25 Q2 | Change % YoY | |
|---|---|---|---|---|
| Revenue | 4,206 | 74% | 4,799 | 69% |
| Net Profit | 253 | 12,550% | 176 | 389% |
Through the table above, We can see that Zomato’s growth has not halted even in this fiscal year. Surprisingly, the net profit has surged to Rs 253 Crore from 2 Crore last year same quarter and the profit has continued to increase in the most recent quarter which is FY25 Q2. In this latest quarter, the profit has increased 389% to Rs 176 Crore from 36 Crore last year.
The Revenue increased by 74% to Rs 4206 Crores during the first quarter and 69% to Rs 4,799 Crores during 2nd Quarter. By this data, we can tell, the company has shown only strength in the first half of the FY25.
Now, that we have With the annual and quarterly financials reflecting such strong results, let’s now explore other key data, such as Zomato’s shareholding pattern and stock performance, in the next section.
Shareholding Pattern
Shareholding Pattern
As on Nov-2024
No Data Found
Notes:
In November 2024, FIIs held 50.23%, a decrease from 54.11% in June 2024.
Mutual Funds increased their holding to 13.57% from 12.52 in Sep Quarter
The founders hold only a 5.5% stake. Hence, they cannot be called promoters, as the requirement to be considered a promoter is 20%. This is why there is no promoter holding for Zomato Ltd.
The Stock Performance
In July 2021, Zomato successfully launched its IPO, garnering significant attention. However, just a few months later, the stock saw a sharp decline, falling by around 75%. After remaining range-bound for over a year, the stock began its upward journey and has continued to rise steadily since then. The table below provides a clear view of the returns it has delivered to its investors over time.
Stock Returns
| Period | Returns |
|---|---|
| 1 Week | -2.13% |
| 1 Month | 3.96% |
| 3 Months | -2.89% |
| YTD | 128.05% |
| 1 Year | 126.13% |
| 3 Year CAGR | 28% |
*Note: CAGR = Compound Annual Growth Rate (a stock’s annual average return for a specific period)
The stock has given more than 100% return in a single year, And currently, it is falling from its all-time high of Rs 304. For more stock details we have made another table of its current price and market cap.
Current Stock Details and Valuation
| Particular | Value |
|---|---|
| CMP | 282.10 Rs |
| Market Cap | Rs 272,236.39 Cr |
| 52-Week High | 304 Rs |
| 52-Week Low | 121 Rs |
| Stock P/E | 367 |
| P/B | 12 |
The figures above clearly indicate that Zomato’s stock is currently overvalued, trading near its all-time high of Rs. 304. This is significantly above its 52-week low of Rs. 121. Additionally, the P/E ratio stands at an elevated 367, and the Price-to-Book (P/B) value is at 12.
However, overvaluation doesn’t necessarily signal a negative outlook. On the contrary, it often reflects strong investor confidence. In this case, it suggests that investors are willing to pay Rs. 367 for every Rs. 1 of the company’s earnings, showcasing their belief in Zomato’s growth potential.
So far, the company’s fundamentals have demonstrated robust progress and consistent growth. Let’s move to the conclusion, where we will evaluate the pros and cons discussed throughout the article.
Conclusion:
Zomato’s growth story has inspired many new tech companies. Despite being in losses over the years, the food delivery company has managed to grow consistently. It has shown growth in every aspect, including consistent revenue growth, improved margins, and positive cash flow. While Zomato’s fundamentals have demonstrated strength, the stock has recently become overvalued. However, this also indicates that investors have confidence in the company. But is it worth buying now? Let’s take a look at the stock’s pros and cons.
Pros:
Consistent Revenue Growth: 56% 5-Year Sales CAGR, 82% 3-Year Sales CAGR.
Achieved Profit: In FY24, Zomato posted profits of 351 Crore for the first time.
Debt-Free: The company is almost debt-free.
Cons:
High P/E and P/B: The stock is trading at 367 P/E and 11.7 time its book value.
Decreasing FII Shareholding: FIIs have reduced their stake to 50.23% in November from 54.11% in June.
Zomato has emerged as one of the favorite stocks among investors, delivering massive returns over the years. But will it continue to do so? Is it still worth investing in? Let us know in the comments below!
Sources used in the article:
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