Will Zomato become world's first firm to profit in grocery business?

Zomato is likely to reach its financial targets in the food delivery business and break even in the Blinkit (formerly Grofers) instant delivery business by the first quarter of fiscal year 2025. This is because the businesses are expected to grow strongly over the next few quarters, according to an ICICI Securities research report.

The company might even become the first in the world to profit in the grocery business, says the report. "Because of this, we believe the stock's value will increase. After the second quarter of fiscal year 2024, we have adjusted our revenue and profit estimates for fiscal years 2025 and 2026. We have also increased our target stock price to Rs 164 from Rs 160," it adds.

In the food delivery business, Zomato's sales grew by 9 per cent in the second quarter of fiscal year 2024 to Rs 7,980 crore, driven by a 5.1 per cent increase in orders. The increase in sales was due to more people ordering food. The average order value remained stable, and people ordered food more frequently, with a 3.7 per cent increase compared to the previous quarter. This was mainly because of favourable seasonal factors and the success of Zomato Gold, says the report.

Read the ICICI Securities report here.