Zomato shares rose 19 per cent in early trades on Tuesday despite the company reporting widening of its losses in the latest Q4 earnings. Due to the stellar intraday rise in the counter, the market capitalization of the new age tech platform hit Rs 50,000 crore mark after a long time. The online food delivery platform reported a consolidated net loss at Rs 359.7 crore in the fourth quarter ended March 2022, impacted by higher expenses. The company had posted a consolidated net loss of Rs 134.2 crore in the same period of the previous fiscal. Although, revenue from operations came in at Rs 1,211.8 crore, up 75.01 per cent compared to Rs 692.4 crore in the same quarter last year.
Deepinder Goyal, Zomato’s CEO, has stated that the company is being “aggressive” about preserving cash in the face of growing losses, and that the company will not make any further investments in the quick commerce field (q-comm), for which it had previously set aside $400 million. Many professionals who departed for their communities during the first Covid-induced lockdown in 2020 have not yet returned, according to the business.
According to a letter shared by the company with its shareholders on Monday evening, Zomato has about Rs 12,200 crore unrestricted cash at this point and it said the capital needs are currently limited. To that effect, it said it will not be making more fresh investments from its $400 million corpus in the q-comm space, where it has previously placed its bets on Blinkit (formerly Grofers).
“As far as quick commerce is concerned, we had given an upper bound of $400 million investment in the next two years (CY22 and CY23) in the last quarterly letter. As of now, we are on plan to stick to this outer limit,” Goyal said. “We are not planning to make any new minority investments as part of this $400m outer limit. Think of this as the max amount of losses we may need to fund in this period of time in the quick commerce business, if and when we fully get into it,” he added.
Zomato also accepted that there was a shortage of workers. “We are seeing some stress on the availability of delivery partners in the current quarter in select large cities since the last week of April. We think this is short-term in nature, as the post-Covid economic recovery has brought back jobs in cities, and we lost some delivery partners to such jobs,” Goyal said. “On top of it, all the workforce which migrated to their hometowns (or villages) during the first Covid wave, hasn’t yet come back to the cities for work”.
