Zomato's Q4 Disaster: Eternal Shares in Green Despite 78% Drop in Profit; Goldman Sachs Gives ‘Buy' Call

Despite posting a steep 78% year-on-year decline in consolidated net profit, Eternal Ltd. (formerly known as Zomato) saw its shares trading in green today after the announcement of Q4 FY25 results the previous day. The surprising market reaction comes even as the food delivery giant is currently struggling with rising expenses, and intensifying competition in the market.

Zomato Share Price Today

Zomato shares opened in the red on May 2, slipping nearly 5% to Rs.220, down from the previous close of Rs.232. However, the stock rebounded and is currently trading 0.59% higher at Rs. 233.89 on the NSE. In the past month, Zomato stock has gained around 10%. The company's market capitalisation now stands at approximately Rs. 2.12 lakh crore. Importantly, Zomato's share price is up over 60% from its 52-week low.

Zomato Q4 FY25 Results

Eternal Ltd on May 1st reported its financial results of Q4 FY25, where the company posted a consolidated net profit of Rs.39 crore for the quarter ended March 31, 2025, down from Rs.175 crore in Q4 FY24. The December 2024 quarter had seen profits of Rs.59 crore, indicating a continuing downtrend.

The decline was largely due to a surge in expenses, which jumped to Rs.6,104 crore from Rs.3,636 crore in the same quarter last year, a sharp 68% YoY increase. On a QoQ basis, costs were up over 10%. Zomato's net profit stood at Rs. 39 crore, down 77% YoY.

Zomato's food delivery business saw a Gross Order Value (GOV) growth of 16% year-on-year (YoY) in Q4 FY25, a significant slowdown compared to the 28.5% YoY growth recorded in Q4 FY24. Meanwhile, its quick commerce segment, Blinkit, continued to outperform with an impressive 134% YoY GOV growth and 21% quarter-on-quarter (QoQ) growth. However, Blinkit's profitability took a hit, as EBITDA losses widened sharply to ₹178 crore in Q4 FY25, compared to just ₹3 crore in Q1 FY25.

CEO Deepinder Goyal said, "We don't see any long-term structural reason for this slowdown. The underlying fundamentals like urbanisation, low food delivery penetration, and rising per capita income in India remain unchanged."

A shortage of delivery partners and subdued demand were cited as key reasons behind the sluggish performance. Additionally, the company delisted nearly 19,000 restaurants from its platform in Q4.

Blinkit Shines In Q4 FY25

While Zomato's core business faced setbacks, its quick commerce arm Blinkit delivered robust growth, with GOV jumping 134% YoY and 21% QoQ. However, this growth came with deepening losses; the EBITDA loss widened to Rs. 178 crore, up significantly from Rs. 3 crore at the start of FY25, as per a CNBC report. Additionally, Blinkit added 294 net new stores, bringing the total store count to 1,301.

Goldman Sachs Remains Bullish on Zomato

In an equity research note dated 21st April, Goldman Sachs reiterated a 'Buy' rating on Zomato stock, setting a 12-month target price of Rs. 310, implying a 34% upside from current levels.

The broking highlighted Zomato's proposal to cap foreign shareholding at 49.5%, stating this could drive significant cost savings for Blinkit in the long run. It projected Blinkit's steady-state EBITDA margins could improve by 100 basis points, potentially adding Rs. 35 per share to Zomato's valuation by FY30.

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