Zomato climbs 5% on strong revenue growth

Zomato climbs 5% on strong revenue growth

Zomato dominated the Indian food delivery market even before Covid-19 lockdowns boosted demand for such services

Zomato Ltd shares rose more than 5% on Wednesday. Credit: Reuters Photo

Shares in India's Zomato Ltd rose more than 5% on Wednesday as investors looked past a quarterly loss and focused on strong revenue growth in the food delivery firm's first earnings report as a publicly listed company.

Based in Gurugram, a satellite city of India's capital New Delhi, the company generates most of its revenue from food delivery and related fees it charges restaurants. It also offers online table booking and special discounts at select restaurants.

Zomato's first-quarter gross orders rose more than four times to Rs 45.4 billion from a year earlier, while revenue from operations more than tripled to Rs 8.44 billion, the company said in a filing on Tuesday.

Along with SoftBank Group-backed startup Swiggy, Zomato dominated the Indian food delivery market even before Covid-19 lockdowns boosted demand for such services.

Zomato said it had completed delivering a billion orders last week, with over 10% of them done in the last three months.

The company's revenue metrics were "significantly ahead" of Jefferies' estimates, the brokerage said in a note, adding that it raised its forecast for Zomato's fiscal 2022-24 revenues by around 10%-20%.

The loss was expected and market participants are more concerned about order numbers and revenue growth, said Siddhartha Khemka, head of retail research at Motilal Oswal Securities in Mumbai.

Zomato, which had a stellar market debut on July 23, saw its shares tumble in the run-up to its quarterly results.

On Wednesday, its shares rose as much as 5.3% to Rs 131.80.

Zomato logged a consolidated net loss of Rs 3.56 billion ($47.79 million) for its first quarter due to higher expenses and as its dining-out business took a hit due to the pandemic. It reported a loss of 998 million rupees a year earlier.