Investing.com– Shares of Zomato Ltd (NSE:) fell sharply on Tuesday after the Indian food delivery firm reported substantially weaker earnings for the December quarter amid rising competition in the quick commerce sector for its Blinkit unit.
Zomato’s NSE-listed shares fell 10.9% to 213.50 rupees by 11:08 IST (05:38 GMT), having fallen as much as 13% earlier. This compared to a 0.8% drop in the benchmark.
Zomato’s net profit slumped 57% to 590 million rupees ($7 million) in the three months to Dec 31, missing Bloomberg estimates of 230 million rupees.
The profit slump was driven chiefly by weakness in Zomato’s quick commerce platform Blinkit, amid rapidly increasing competition in the sector from rivals such as Swiggy’s Instamart, Zepto, as well as new, deep-pocketed entrants including Walmart-backed Flipkart, Tata Group’s BigBasket and Amazon.com (NASDAQ:).
Zomato’s overall revenue grew to 54.05 billion rupees, just scraping past estimates of 53.82 billion rupees.
Blinkit remained a major growth driver for the firm, given that the platform still maintained its lead in India’s quick commerce sector. But this lead was seen shrinking substantially in the December quarter, amid increased competition.
The unit has rolled out aggressive discounts to capture more market share and revenue. But this trend has undercut Zomato’s profit margins, with revenue from food delivery- Zomato’s biggest breadwinner- doing little to offset increased margin pressure.
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