Investing.com–Stocks Zomato Ltd (NSE:) fell sharply on Tuesday after the Indian food delivery company reported significantly weaker earnings for the December quarter amid growing competition in the express commerce segment for its Blinkit unit.
NSE-listed Zomato shares fell 10.9% to Rs 213.50 by 11:08 EST (05:38 GMT), after falling 13% earlier. This compares to a 0.8% decrease in the index.
Zomato's net profit fell 57% to 590 million rupees ($7 million) in the three months to December 31, falling short of Bloomberg's estimate of 230 million rupees.
The profit decline was mainly driven by weakness in Zomato's Blinkit express commerce platform, amid rapidly increasing competition in the segment from rivals such as Swiggy's Instamart and Zepto, as well as deep-pocketed new entrants including Walmart-backed Flipkart, Tata group's BigBasket and Amazon. com (Nasdaq:).
Zomato's total revenue rose to Rs 54.05 billion, beating previous estimates of Rs 53.82 billion.
Blinkit has remained a key driver of the company's growth, as the platform continues to maintain its leadership in the quick commerce segment in India. But this lead was significantly reduced in the December quarter, amid increased competition.
The unit introduced deep discounts to gain more market share and revenue. But the trend has eaten into Zomato's profit margins, as revenue from food delivery – Zomato's biggest breadwinner – has done little to offset the growing margin pressure.
