What Is Driving Zomato's Market Cap Despite Weak Financials?

Notwithstanding recent slowdowns in financials, Zomato's market capitalization climbed significantly in 2024-2025. In 2024, Zomato's market capitalization soared, and by early 2025, it was valued between Rs 1.95 and Rs 2.2 lakh crore. With a 58% market share, Zomato's food delivery business continues to be its primary source of revenue. Zomato's initiatives to enhance unit economics, such as hiking platform fees and streamlining delivery costs, have raised profitability even if growth has slowed.

After being acquired in 2022, Zomato's Blinkit has experienced quick growth, with revenue rising 129% YoY. Zomato's top-line growth has been greatly aided by Blinkit's ability to scale its business and expand its network of stores. It announced in June 2022 that it had acquired Blinkit for a stock deal of about USD 568 million. According to the last quarter of reporting for FY25, the company's turnover jumped from Rs 4192 crores in March 2022 to Rs 17972 crores as a result of its entry into the fast commerce industry.

Since its initial public offering (IPO) debut, Zomato has seen a phenomenal run on the stock exchange, despite the current dip in the stock market. In July 2021, Zomato held its Initial Public Offering (IPO), with an issue price of Rs 76. The market value of the company was around Rs 64,365 crore at the time. Since its IPO, Zomato's market value has more than tripled, standing at Rs 2,03,622.40 crore today. Zomato's rapid development into rapid commerce and stronger market positioning enabled the company to produce plenty of future business value, even while its profitability was dropping. What is driving Zomato's market capitalization in spite of falling profit and sales growth? Let's crack the subject matter here from the industry experts.

Zomato's Winning Strategy: Scale, Brand Power, and Market Expansion

Zomato's dominance in the Indian market, reinforced by economies of scale and strong brand recognition, provides resilience against competition. Further, food delivery and quick commerce is a new category of business which offers huge market creation opportunity and potential consumer shift. Additionally, Zomato's push into other sectors provides long-term growth potential. The company is moving beyond food delivery to other businesses, positioning itself as a broader consumer tech platform. The company is leveraging data analytics, AI-driven recommendations, and restaurant partnerships to enhance monetization, while its push into fintech and cloud kitchens signals long-term growth potential, attracting investors despite current profitability challenges and valuation metrics, according to Vishnu Kant Upadhyay, AVP - Research & Advisory, Master Capital Services.

Zomato's Performance (2024-2025)

According to Gaurav Garg, Lemonn Markets Desk, below is the growth and financial performance of Zomato in terms of market cap to profitability.

Growth and Financial Performance: Zomato has experienced significant market cap growth in 2024-2025, despite recent slowdowns in profit growth and revenue expansion. Key business segments, such as Food Delivery, Quick Commerce (Blinkit), and B2B Supplies (Hyperpure), all showed impressive growth, with Blinkit experiencing a remarkable 129% YoY revenue increase in Q2 FY25. However, core food delivery growth has slowed in recent months, with a decline in monthly transacting customers and lower-than-targeted order value growth.

Core Food Delivery: Zomato's food delivery segment remains its largest revenue contributor, holding a 58% market share. Although growth has slowed, Zomato's efforts to improve unit economics, such as raising platform fees and optimizing delivery costs, have increased profitability. The company is experimenting with new offerings like faster delivery times to revive growth. While profitability is stable, increasing customer engagement and order frequency are essential to drive further revenue.

Quick Commerce (Blinkit): Zomato's Blinkit, acquired in 2022, has seen rapid expansion with 129% YoY growth in revenue. Blinkit's success in scaling its operations and growing its store network has contributed significantly to Zomato's top-line growth. However, the segment is not yet profitable, with operating losses rising due to heavy investment in expansion. Competition is intensifying, notably from rivals like Zepto and Swiggy's Instamart, posing risks to Blinkit's dominance.

B2B Supplies (Hyperpure): Hyperpure, Zomato's business-to-business supply arm, has been steadily growing and is approaching profitability. In FY25, Hyperpure's revenue showed substantial growth, and it is expected to break even soon. The acquisition of Blinkit further expands Hyperpure's potential by enabling the supply of goods to Blinkit's grocery vendors.

Emerging Initiatives: Zomato has ventured into the dining-out and entertainment services sector, including restaurant reservations, event ticketing, and live events through its District app. Although this segment is still small, it shows promise with an increase in revenue and strategic acquisitions, positioning Zomato as a multi-vertical platform with a sticky customer base.

Market Capitalisation and Investor Sentiment: Zomato's market cap surged in 2024, reaching a valuation of approximately Rs 1.95-2.2 lakh crore by early 2025, driven by profitability milestones and strong growth in quick commerce. Zomato's stock performance was strong, even after slight dips. Its profitability and market dominance, especially in food delivery and quick commerce, make it attractive to investors. The company's inclusion in the NIFTY50 index further boosted its profile.

Outlook for Revenue and Profitability: Zomato will continue to see robust revenue growth, especially driven by Blinkit and B2B supplies. However, growth is expected to moderate beyond 2025. Zomato's profitability is improving, particularly in food delivery and Hyperpure, while Blinkit remains a drag on margins. Zomato aims for steady margin improvement, with food delivery EBITDA margins expected to stabilize at 4-5%. Blinkit's losses may reduce as scale and efficiency improve.

Competitive Landscape: Zomato's primary rival, Swiggy, has seen similar growth but remains unprofitable. Both companies are now focused on sustainable growth rather than price wars. Zomato holds an edge as the only listed profitable player in India's food delivery market. On the global stage, Zomato's valuation is higher than some Western peers, reflecting its higher growth rate and India's untapped market potential.

Future Prospects: Zomato's stock price is expected to rise steadily, with a market cap increase to Rs 3.2-3.3 lakh crore if growth targets are met. However, risks such as competition and regulatory challenges could cap growth. Zomato's success will depend on its ability to sustain growth in quick commerce, manage competition, and maintain profitability across its diverse business segments.

Zomato Bets Big On Quick Commerce-Will Profitability Follow?

Despite experiencing declining profits, Zomato enjoyed the growth in its market positioning and aggressive expansion into quick commerce helped the company to create a lot of future business value. Due to this, Zomato has been dominating higher market share, and strategic initiatives have been aimed at future growth. The long-term outlook remains optimistic considering factors like high growth in quick commerce and company focus toward profitability along with favorable market trends for growing urban demand for convenience services, said Prashanth Tapse, Sr VP research analyst at Mehta Equities Ltd.

But risk also follows when the sector is growing fast like high competition and rising operational costs due to high capex. If Zomato navigates the challenges and focuses on rationales of growth with profitability in focus, the long-term outlook remains upbeat, he added.

Despite Market Volatility How Zomato's Stock Remains A Market Darling?

The tech enabled new age company has catapulted to the leadership position in the online food delivery space by strategically outwitting its competition, repeatedly innovating its product offerings and leveraging on its efficient technology platform to provide access to millions of Indian from the comforts of their homes, according to Gaurav Goel, (Entrepreneur and SEBI Registered Investment Advisor).

The company was listed on the stock exchanges in 2021 and saw a bumper listing. There was a crash in the stock price and market capitalization as the company struggled to generate profits, and losses kept mounting. However, course correction, a hike in food delivery fees and the focus of top management on profitability led to unprecedented growth, and it soon became operationally profitable. In June 2022, it announced the acquisition of Blinkit in a stock deal valued at approximately USD 568 million.

The foray into the quick commerce space increased the turnover of the company from Rs 4192 crores as of March 2022 to Rs 17972 crores as per the last quarter reporting for FY25.

"Though Blinkit led to a revenue surge, it has also put pressure on the bottom line of their balance sheet. The quick commerce space is a highly competitive and loss-making industry in the country. Blinkit is still grappling with the infrastructure addition in the form of dark stores as both demand and customer expectations are very high in this space," added Gaurav Goel.

Despite recent corrections from the highs in excess of Rs 300 per share to Rs 211 per share currently, it stalls trades at a PE multiple of 294 and appears expensive on all profitability parameters. However, it operates in an industry which is growing at an exponential rate and its leadership position commands high valuation multiple," he further recommended.

Zomato Outlook

Zomato's outlook in terms of revenue is positive as the new category and next-gen business offer huge growth potential, with evolving consumer preferences and increasing acceptance of food and grocery delivery services. However, margin expansion will play a crucial role in increasing long-term profitability, as the food delivery and quick commerce sectors are highly competitive with thin margins and high customer acquisition costs.

"While revenue may continue to grow, the current profitability levels make it hard to digest Zomato's lofty valuations and market capitalization. Compared to other businesses with similar market caps, which generate significantly higher profits, Zomato's valuation, on the other hand, is more driven by future profitability potential than present earnings and cash flows, increasing the risk factor," added Vishnu Kant Upadhyay.

" Going forward we expect Zomato to improve its profitability as losses from Blinkit will subside gradually and dark stores addition target is achieved. Market capitalisation is likely to touch Rs 2,50,000 cr over next 1-2 years," stated Gaurav Goel, (Entrepreneur and SEBI Registered Investment Advisor).

Zomato's evolution into a multi-vertical platform, expanding into food delivery, grocery, B2B supplies, and entertainment, is driving strong growth and investor confidence. With profitability on the rise and a strong market position, Zomato's future looks promising, but the company must navigate competitive pressures and economic conditions to sustain its upward trajectory, said Gaurav Garg.

Disclaimer

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