Zomato’s Market Cap Continues To Rise Even As Profit Decline, Here’s Why

Zomato India’s food delivery platform saw a surge in its market capitalisation at Rs 2,00,100 crore despite a drop in its net profit, when compared with the market capitalisation of well-established companies, including Tata Steel, Siemens, Varun Beverages, Siemens, Grasim, Trent, and more.

This raises the question of what is driving its growth.

According to Zomato’s Q3FY25 earnings report, the company recorded a 57 per cent year-on-year (y-o-y) decline in its net profits, which fell to Rs 59 crore in Q3FY25 from Rs 138 crore in Q3FY24. Meanwhile, the profit declined by 66 per cent in Q3FY25 from Q2FY25, at Rs 176 crore.

However, despite the decline in profit, the food delivery platform reported a 64 per cent increase in revenue at Rs 5,405 crore compared to Rs 3,288 in the previous year, which contributed to Zomato’s market capitalisation growth.

Zomato's market capitalisation growth could be attributed to various parameters, including strong revenue growth, aggressive expansion in the quick commerce (QC) segment via Blinkit, and improved profitability in its main food business.

In June 2022, Zomato had announced the acquisition of Blinkit in a stock deal valued at approximately $568 million.

Here are a few factors that have contributed to Zomato’s growth.

According to Zomato’s Shareholder Letter released on January 20, 2024, it had added 368 new Blinkit stores in Q2FY25 and Q3FY25. Blinkit had 10,007 stores till the quarter ending December 2024. Zomato has pegged 2,000 stores by the end of December 2025. 

Additionally, Blinkit’s Gross Order Value (GOV) increased by 120 per cent on a y-o-y basis to Rs 7,798 crore in Q3FY25. On a quarter-on-quarter (q-o-q) basis, the growth was registered at 27 per cent.

Strong Fundamentals in Core Food Delivery

Zomato’s Food delivery platform adjusted earnings before interest taxes depreciation and amortisation (ebitda) margin increased to 4.3 per cent of GOV in Q3FY25 compared to 3 per cent YoY, driven by platform fee hikes and cost optimisations. 

The company anticipates the margins to stabilise at a growth of 5 per cent in the coming quarters, as per its letter to shareholders. 

Meanwhile, despite a 2 per cent q-o-q GOV growth slowdown in Q3FY25, Zomato attributed this to a “broad-based demand slowdown”, but remained confident in 20 per cent annual GOV growth long-term.

What is Driving Zomato’s Revenue

Zomato’s revenue increased by 255 per cent to Rs 259 crore on a yearly basis, in Q3FY25, after it acquired Paytm’s entertainment ticketing business. 

Zomato’s recently launched District app recorded over 6.5 million downloads. This positioned Zomato as a one-stop destination for dining as well as an entertainment platform, as per its shareholder letter.

Shrikant Chouhan, head, equity research, Kotak Securities, says: “Quick commerce (QC) remains on a fast-growth trajectory driven by store additions and customer acquisition by incumbents. Blinkit remains best positioned among competitors on account of size (2X the next largest peer) and superior economics. However, expansion by competitors may hamper near-term profitability and also cloud medium-term profit expectations.”

Additionally, Zomato’s business-to-business (B2B) revenue jumped by 95 per cent on a y-o-y basis to Rs 1,671 crore in Q3FY25, indicating a strong demand from partner restaurants.

The biggest driver of market cap expansion, however, remained Blinkit, according to a report by HDFC Securities.  The brokerage firm projected the quick commerce growth at a compound annual growth rate (CAGR) of 65 per cent from FY25 to FY27.

The research firm has also expressed scepticism over Blinkit’s high cash burn rate of Rs 12-15 billion (Rs 1,200-1,500 crore) per quarter, which could pose challenges to long-term profitability.

Despite these concerns, the firm acknowledged that Blinkit’s unit economics are superior when compared with its peers like Swiggy, etc. Once it reaches the scale, Blinkit could become a major cash generating business for Zomato, according to the report.

Meanwhile, Blinkit’s core customers who have been active since September -December 2022 showed 42 per cent retention till the quarter ending December 2024. This customer paid an average delivery fee of Rs 20/order despite competition, indicating a sticky demand.

Unlike traditional companies, such as Tata Steel, IOC, Hindalco, Divi’s Lab, Eicher Motors, Pidilite, DLF, Varun Beverages (leaders of their segment), Zomato operated in high-growth tech-driven sectors (food delivery, quick commerce) where investors prioritised scaling potential over short-term profits. Its first-mover advantage in India’s food-tech market and diversification into adjacent verticals justify premium valuation.

Additionally, Zomato’s parent company Eternal was included in Nifty 50 on March 27, 2025, marking its entry in the big guns’ category in equity market.

Additionally, Nuvama attributed Zomato’s rising market cap to its strong 64.4 per cent y-o-y revenue growth in Q3FY25, indicating that the company is successfully scaling both its food delivery and Blinkit businesses. While net profit came in significantly below at Rs 59 crore from the estimate of Rs 229.7 crore, the long-term outlook of the research firm remained highly positive. The brokerage expected Zomato’s revenue to grow at a CAGR of 52.1 per cent from FY24 to FY27, with a corresponding earnings per share (EPS) growth of 373.9 per cent.

This means that while the company may be facing short-term margin pressures, investors are betting on future profitability, which justifies a higher market capitalisation.

Echoing HDFC Securities, Nuvama also believes that Blinkit had been a major driver of growth, with its GOV increasing by a staggering 120.2 per cent y-o-y to Rs 7,790 crore Further, the food delivery segment remained profitable, with its EBITDA margin improving to 8.5 per cent, as per the report.

Future Growth Prospects

Nuvama had assigned a sum-of-the-parts (SOTP) valuation that puts its projected market cap at Rs 2,80,000 crore (Rs 28 lakh crore) by FY27. 

Chouhan says: “We believe FY26 may be a year of depressed profitability for Blinkit due to steep store additions and high competitive intensity. For now, we expect some price discipline to come in by FY2027, though visibility on the same remains low for now. While a good long-term bet, the stock may trade range-bound, given the unpredictability of the QC business's profitability.”

Indicating optimism, Axis Securities Report noted that the food delivery business remained cash flow positive, and Blinkit is expected to break even in the next few years. 

“Blinkit will subside gradually, and the dark stores’ target is achieved; its market capitalisation is likely to touch Rs 2,50,000 crore over the next 1-2 years,” it said.