Indian food delivery company Zomato slumps on weak order value growth

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BENGALURU (Reuters) – Shares of Zomato Ltd fell 8.4% on Friday after the Indian food delivery company posted tepid sequential growth in gross order value (GOV) in the third quarter, as more more people chose to dine out following the easing of pandemic curbs.

After the market closed Thursday, Zomato said its third-quarter GOV — the total dollar value of all food delivery orders — jumped 84.5% from a year ago, but sequentially it rose just 1.7% as restrictions on restaurants were lifted.

People had been hooked on having meals and groceries delivered to their homes since March 2020 after the country went into lockdown.

Brokerage Jefferies slashed Zomato’s full-year 2022-2026 gross commodity value forecast by 4-9%, and said the past two quarters show just how much this business (and likely industry Internet) is likely to be unpredictable.

“The earnings release remains opaque, lacking in substance and depicts only selective aspects of the business,” Jefferies added, reducing the target price from Rs 175 to Rs 120 while maintaining a “buy” rating on the stock. Zomato.

Shares of the delivery company were trading at 88.6 rupees each, as of 0432 GMT.

Zomato’s consolidated net loss narrowed to 632 million rupees ($8.38 million) for the December quarter from 3.53 billion rupees a year earlier, helped by a one-time gain of 3.16 billion rupees from the sale of its stake in Fitso, an online platform that helps people discover sports venues.

Zomato, which debuted in the market in 2021, said on Thursday it would raise the upper limit of its potential investments over the next two years in the fast trade market to $400 million.

Competition in India’s fast-paced commerce and hyperlocal delivery space is heating up. Google and Reliance Industries invested in Bengaluru-based Dunzo, while Zomato invested in rival Blinkit.

($1 = 75.0270 Indian rupees)

(Reporting by Chandini Monnappa and Anuron Kumar Mitra in Bengaluru; Editing by Sriraj Kalluvila, Vinay Dwivedi and Sherry Jacob-Phillips)

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