Food delivery platform Zomato foresees its core delivery business to grow at an annual rate of 30% over the next five years, driven by the sector’s nascent stage in India.
Food delivery sector is in nascent stages – CEO, Zomato
“The food delivery sector is still in its nascent stages in the country and… more competition will only foster innovation and growth which will benefit the sector overall,” said Rakesh Ranjan, Zomato’s food delivery CEO, as per INC42.
Reportedly, Zomato currently dominates the food delivery space with a 58% market share, surpassing rival Swiggy‘s 34%. The company’s food delivery business, accounting for 58% of revenue, recorded a gross order value (GOV) of INR 322.24 billion last fiscal year, maintaining a 30% average annual growth over four years. Ranjan aims to sustain this growth pace for the next four to five years.
Meanwhile, the food delivery platform has expanded its restaurant network to 247,000 average monthly active partners, marking an 18% year-on-year increase. New features include scheduled delivery, discounted cancelled orders, and large order fleets. However, “phenomenally high” attrition among delivery drivers remains a challenge, prompting the company to offer benefits and flexibility to onboard gig workers.
Zomato’s revenue surges to INR 2,848 Cr
Further, Zomato’s recent performance shows strong growth, with operating revenue increasing 68.5% year-on-year to INR 2,848 crore in Q2. Profit after tax (PAT) surged 389% from INR 36 crore, while food delivery GOV rose 5% quarter-on-quarter to INR 9,690 crore. Quick commerce arm Blinkit’s GOV increased 25% quarter-on-quarter to INR 6,132 crore.
The company plans to launch an INR 8,500 crore qualified institutional placement (QIP) in December, with Morgan Stanley selected as the investment bank. The fundraise aims to enhance Zomato’s cash balance, which stood at INR 1,726 crore at the end of September 2024. Morgan Stanley maintains an “overweight” rating on Zomato’s stock and has raised its price target to INR 355 from INR 278, citing strong market leadership and growth potential in quick commerce.
