Zomato is a leading Indian restaurant aggregator and food delivery company. It was founded in 2008 by Deepinder Goyal and Pankaj Chaddah. The inception of Zomato, originally named FoodieBay. It was then inspired by the founders’ desire to simplify the search for diverse restaurant options. Initially, the platform functioned as a directory, listing restaurants and providing recommendations based on user preferences for location, cuisine, and price range.
In its formative years, Zomato faced several challenges. The expensive internet and low smartphone penetration somehow restricted the company’s marketing efforts. At that time, the company was mostly known by people residing in big cities.
Overcoming the early obstacles, Zomato has achieved remarkable success. It went public in 2021 with a valuation of over $9 billion. Here is all you need to know about this company’s growth.
Zomato Revenue Model
Zomato operates in four segments: Delivery, Dine Out Advertising, Quick Commerce Business, and Hyperpure. Currently, around 48.3% of the company’s revenue comes from the delivery business, 2.6% from dine-out advertising, 21.59% from quick commerce, and 26.7% from Hyperpure.
In terms of location-wise breakdown, 95.8% of the business is from India, 3.2% from the UAE, and 1% from other countries.
How is Zomato Driving the Food Tech Revolution?
The three key reasons driving Zomato’s success are:
1. Expansion Plans
Zomato’s global expansion has become possible because of strategic growth and local impact. The company reported a 73% year-on-year revenue increase to Rs 3,562 crore in Q4 FY24, with Blinkit’s revenue more than doubling to Rs 769 crore.
Shifting focus towards quick commerce, Zomato has plans to expand Blinkit stores to 1,000 by March 2025. The company’s B2B segment, Hyperpure, also saw a 99% revenue increase, reflecting its strong foothold in restaurant supplies.
Internationally, Zomato has been eyeing improving its presence in Kuala Lumpur, Sydney, and Istanbul.
2. Sustainability and Social Responsibility
Zomato has committed to 100% EV adoption for delivery by 2030. At present, around 20% of deliveries are made on bicycles. In addition to reducing its carbon footprint, the company played a key role in providing oxygen concentrators and food support to affected areas and individuals during COVID-19.
It also launched a free vaccination drive for its delivery partners and set up a COVID relief fund for restaurant workers.
3. Improved User Experience
The company has streamlined its app navigation. The improved search functionality with advanced filters for cuisine, dietary restrictions, and price range is helping users place orders with ease. Zomato has also introduced a transparent fee structure that displays all costs upfront to avoid surprises at checkout.
Furthermore, the company is leveraging data analytics to offer tailored recommendations and deals. The integration of Zomato Gold and BlinkIt provides a seamless experience from dining out to grocery shopping.
Zomato Share Performance
The Zomato share price chart shows a return of 194.03% in the last year. The two-year return stands at 232.09%, while the return since inception was 48.65%. Zomato share price as of June 2024 is around Rs. 180+.
This indicates that the company has begun to gain momentum in its performance in recent years. However, despite this segment yet to be explored to its full potential, Zomato’s P/E of 484 suggests that the stock, currently priced at Rs 187, is overvalued.
Conclusion
Zomato’s story is not just about a company’s success but about how a vision can transform an industry. As Zomato continues to push the boundaries, it remains at the forefront of the food tech revolution by proving that the right mix of technology, innovation, and customer focus can help any company overcome the challenges. To invest in stocks, consider Dhan.
