Zomato’s plates full, no plans for new minority investments: Deepinder Goyal

Zomato, which announced its September quarter results this evening, reported a consolidated net loss of Rs 250.80 crore, which was sequentially higher than its June quarter loss (Rs 186 crore). In a letter to shareholders, Zomato Founder & CEO Deepinder Goyal clarified that the foodtech giant has “no plans to make any new minority investments”.

“Nor has there been any change in our capital allocation plans since the last quarter. We have our plates full with three potentially large businesses -- food delivery, Hyperpure, and quick commerce,” he stated.

In the past, Zomato has made minority investments in a bunch of start-ups, including Shiprocket, Curefit, and Magicpin. In Blinkit (earlier Grofers), it first made a $100 million investment, before buying out the quick commerce start-up for Rs 4,447 crore in an all-stock deal -- a move that displeased retail investors sending Zomato stock tumbling for days together.  

Goyal further shared that going ahead the food delivery business will remain at the core of Zomato’s growth. “We have been on the lookout for new and potentially large growth ideas for the long-term growth of our business -- e.g. Intercity Legends (intercity food delivery), and Zomato Instant (food delivery in 10-15 minutes); but these are innovations within the ‘food delivery’ business, and are relatively low investment initiatives. Any capital used by these two initiatives will be well within our overall capital allocation plan for the food delivery business,” he explained.

Sequentially, Zomato’s food delivery business grew to Rs 1,581 crore from Rs 1,470 crore in the June quarter. “The gross order value (GOV) growth was 3 per cent QoQ (23 per cent YoY) driven by growth in both order volumes and average order value,” Zomato said in its earnings statement.

The platform’s average monthly transacting customers grew 4.4 per cent QoQ to 17.5 million in Q2 FY23 as compared to 16.7 million in Q1 FY23. But according to Goyal, food delivery can grow faster than it currently is.

“While our food delivery business has been growing and steadily moving towards profitability, I believe there is room for the business to grow much faster than what it is currently trending at,” he said.

Goyal also added, “The restaurant and food delivery industry in India is still nascent and we need to relentlessly execute to tap into the large opportunity. I don’t want ‘macro headwinds” to be an excuse for us to innovate less.”

Zomato stock closed 2.53 per cent down at Rs 63.65 on the BSE on Thursday.