Zomato shares fall 13% on third-quarter earnings decline, Blinkit competition By Investing.com
Investing.com– Stocks Zomato Ltd (NSE: ) fell sharply on Tuesday after the Indian food delivery company reported significantly weaker earnings for the December quarter amid growing competition in the fast-food sector for its Blinkit unit.
Zomato’s NSE-listed shares fell 10.9% to 213.50 rupees by 11:08 IST (05:38 GMT), after falling as much as 13% earlier. This compares with a benchmark decline of 0.8%.
Zomat’s net profit fell 57% to 590 million rupees ($7 million) in the three months to December 31, short of Bloomberg estimates of 230 million rupees.
The fall in profits was driven mainly by weakness in Zomato’s e-commerce platform Blinkit, amid fast-growing competition in the sector from rivals such as Swiggy’s Instamart, Zepto, as well as deep-pocketed new entrants including Walmart-backed Flipkart, Tata Group’s BigBasket and Amazon. com (NASDAQ:).
Zomat’s total revenue rose to 54.05 billion rupees, just beating the previous estimate of 53.82 billion rupees.
Blinkit remained the main driver of the company’s growth, as the platform continued to maintain its leading position in the Indian e-commerce sector. However, this lead was seen to shrink significantly in the December quarter amid increased competition.
The unit launched aggressive discounting to capture more market share and revenue. But this trend has eroded Zomato’s profit margins, with revenue from food delivery – Zomato’s biggest family breadwinner – doing little to ease the increased pressure on margins.
