India’s Zomato on track for best day after strong quarter

BENGALURU (Reuters) – Shares of Indian food delivery firm Zomato Ltd jumped more than 18% on Tuesday and were set for their best session, a day after the Ant Group-backed company recorded more orders and narrowed its losses in the June quarter.

The Gurugram-based company, which operates in more than 1,000 towns and cities in India, posted a quarterly loss of 1.86 billion rupees ($23.67 million) on Monday, compared with a loss of 3.56 billion rupees last year.

Revenue from operations, which mostly comes from its mainstay food delivery and related fees it charges restaurants for using its platform, rose 67% to 14.14 billion rupees in the three-month period ended June 30.

Gross order value – or the total value of all food delivery orders placed online on Zomato’s platform – rose 41.6%, and the company said its adjusted EBITDA for the food delivery unit broke-even for the quarter.

“We like Zomato for its long runway for growth, steady market share gains, and fast pivot to profitability, despite challenges – slower growth than in the last two years and heavy investments in Quick Commerce, where profitability is not in sight in the near term,” Morgan Stanley analysts said.

The brokerage resumed coverage of the stock with an “overweight” rating and price target of 80 rupees.

The stock, which lost nearly 60% from its debut price a year ago, was last up 16.5% at 54 rupees, bouncing from record lows seen last week.

($1 = 78.5700 Indian rupees)

(Reporting by Rama Venkat, Nallur Sethuraman, Navamya Acharya in Bengaluru; Writing by Tanvi Mehta, Editing by Shailesh Kuber and Sherry Jacob-Phillips)