Food tech player Zomato reported a large consolidated loss of Rs 360 crore for the March quarter on Monday, compared to Rs 131 crore in Q4FY21. Revenue, however, jumped a strong 75% year on year to Rs 1,212 crore.
Net cash used for operating activities was Rs 693 crore less than Rs 1,018 crore reported in the same period last year.
Founder and CEO Dipinder Goel says saving cash is now a priority and companies are getting aggressive about it. Zomato currently has unlimited cash of about Rs 12,200 crore.
The company’s CFO, Akshant Goel, said the reduction would be driven by improvements in food supply business contribution margins and operating leverage “as our revenue grows faster than our fixed costs”.
The company said in a stock exchange filing that average monthly transaction customers were at an all-time high of 15.7 million in Q4FY22, up from 15.3 million in the December quarter. Similarly, average monthly active restaurant partners and delivery partners were at all-time highs, it added.
The company’s gross order value for the food delivery business grew by 6% and 77% year-on-year to Rs 5,850 crore at 4FY22, respectively. This was driven by healthy growth in order volumes while average order values remained stable, the company said.
CEO Goel acknowledged that there has been some pressure on the availability of delivery partners in the current quarter in selected major cities since the last week of April. “We think it’s because of the short-term nature that post-Covid economic recovery has brought jobs back to the cities and we’ve lost some distribution partners for this type of job,” he said. Workers who were relocated to their hometown (or village) during the first Kovid wave have not yet returned to the city, thus hindering the acquisition of delivery partners, he added.
Dipinder Goel added that the company has no plans to invest in minority equity at present.
CFO Akshant Goel said there were no plans to raise any more capital at this stage. “We’re well-funded to fuel all of our business growth plans.”
In the Blinkit M&A deal, in addition to a short-term loan of up to $ 150 million to fund short-term capital requirements, the company said there was little to share at the moment.
For faster trading, the company set a ঠ 400-million investment ceiling for the next two years (CY22 and CY23) in its last quarterly letter. “So far, we plan to stay within this external boundary. We are not planning to invest any new minority as part of this $ 400-million out-of-bounds limit, “said Akshant Goyal.
Before the results were announced on Monday, the stock closed down 2% at Rs 56.80.
There are some concerns about Zomato’s liquidity situation because the core business does not generate cash and the company may have to spend some extra money to acquire Blinkit.
Analysts at Kotak Institutional Equities (KIE) point out that even estimating the high cash value of paying for Blinkit and maintaining a high cash burn for the food delivery business will continue until Zomato FY25 and possibly longer. “We estimate the company’s March 2022 cash balance to be $ 1.5 billion, which provides comfort in future growth,” they wrote.