Analysts positive on new age cos ahead of Q1 FY25 results; Zomato top bet

New age cos in focus: Several internet companies have shown major growth in their stock price this year, with Zomato and PB Fintech soaring 67 per cent and 77 per cent year-to-date (YTD), respectively, BSE data shows. Just Dial zoomed 29 per cent during the same period. 

However, IndiaMART InterMESH witnessed a slight decline of 1.3 per cent, and Easy Trip Planners managed a modest 3.2 per cent increase, trailing behind their peers in the sector.

Analysts at Nuvama Institutional Equities are optimistic about the revenue prospects of these "new age" internet companies. They anticipate robust revenue and earnings growth for Zomato, with further margin improvements expected for IndiaMART and Justdial. 

 

According to Nuvama, Zomato is expected to post a strong growth in Q1FY25, with expected revenue increasing by 11.5 per cent quarter-on-quarter (Q-o-Q) and a whopping 64.4 per cent year-on-year (Y-o-Y). Specifically, the adjusted revenue from their food delivery business is anticipated to grow by 5.3 per cent Q-o-Q and 23.9 per cent Y-o-Y, while Blinkit, their qCommerce segment, is forecasted to grow 29 per cent Q-o-Q.

On the other hand, domestic brokerage Elara Capital estimates that Zomato will achieve an overall revenue of Rs 3,960 crore in Q1FY25, marking a major 63.9 per cent Y-o-Y growth.

Despite challenges such as heat waves, low delivery partner availability in Tier I markets, and the impact of general elections affecting order volumes in May 2024, analysts believe, Zomato's business picked up momentum in June, suggesting sustained growth in the near term.

Elara Capital further anticipates strong growth metrics in key segments including a 20.0 per cent Y-o-Y increase in gross order value (GOV) for food delivery and a 110 per cent Y-o-Y growth for Blinkit. They predict specific revenue growth rates of 33.1 per cent Y-o-Y for food delivery, 127.0 per cent Y-o-Y for Blinkit, and 90.0 per cent Y-o-Y for Hyperpure.

“We expect the overall Ebitda margin to expand to 3.4 per cent, up 100 bp Q-o-Q, as against -2.0 per cent margin in Q1FY24, due to margin expansion in the food delivery segment and break-even in Blinkit,” Elara Capital said in a note.

Analysts at Kotak Institutional Equities have recommended a 'Buy' rating for Zomato, setting a target price of Rs 225. They anticipate strong performance in Q1FY25, driven by a robust 23 per cent year-on-year growth in food delivery Gross Merchandise Value (GMV) and a 113 per cent year-on-year growth in Blinkit GMV. 

The analyst expects both segments to show improvement in contribution margins sequentially, supported by higher platform fees in food delivery and increased advertising income in Blinkit.

Furthermore, the analyst foresees operational leverage benefits in the food delivery segment, although the expansion of stores in Blinkit might limit its EBITDA performance.

Expectations from other new age cos

Analysts anticipate IndiaMART to achieve a 4.6 per cent Q-o-Q and 16.7 per cent Y-o-Y revenue growth in Q1FY25, driven by improved realisation rates. Subscriber additions, analysts opined, are expected to be modest at approximately 2,500 Q-o-Q, while margins are projected to increase by 190 basis points to 30.0 per cent.

For JustDial, revenue growth is forecasted at 5.1 per cent Q-o-Q and 15.0 per cent Y-o-Y in Q1FY25. Analysts predict an improvement in Ebitda margins from 26.2 per cent to 27.2 per cent during the same period.

In the personal beauty sector, Nykaa is likely to achieve strong growth with analysts predicting a 21 per cent and 28 per cent Y-o-Y increase in Beauty, Personal Care (BPC), and Fashion Gross Merchandise Value (GMV), respectively. Overall revenue, analysts noted, is expected to grow by 21.6 per cent Y-o-Y to Rs 1,730 crore, despite a slight margin dip attributed to marketing and other operational expenses.

While challenges persist in certain segments, the outlook mainly remains positive for internet companies in terms of growth, driven by operational enhancements and market expansion strategies.