?? Profitability, for real

Zomato surprised Dalal Street and the tech ecosystem this past week by serving up a profit. Adjusted for nothing — just good old profit after tax (PAT).

This makes Zomato the only third food-delivery business in the world after China’s 美团 and Uber Eats to reach the milestone. What’s more, it has forecast a 40% revenue growth.

Brokerage JM Financial Ltd said calling Zomato’s shift from losses to profitability ‘stellar’ would be an understatement and upgraded the description to “just unfathomable”.

The development is significant for two reasons:

1) The unicorn hasn’t achieved PAT at the expense of growth. Its core food-delivery business rebounded in the April-June period after two relatively stagnant quarters. Its B2B grocery arm, Hyperpure, is also growing. According to Zomato founder Deepinder Goyal , its grocery app, Blinkit , could create more shareholder value than Zomato within a decade.?

2) Zomato did not bag profits at the cost of market share. It maintains its leadership in food delivery against Swiggy; the gap may even be widening. Blinkit is also measuring up to Swiggy’s Instamart with a much lower cost base, as per insiders.

Zomato, one of the first Indian unicorns to hit the public markets in 2021, has challenged the notion that a company must choose between growth and profitability.

?Away from home, ride-hailing player Uber impressed analysts in the US by announcing its first-ever operating profit. Both Zomato and Uber were founded in the 2008-09 era.

Aditi Shrivastava ?

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