Zomato's share price gains as subsidiary withdraws NBFC licence from RBI

Zomato, India’s leading food and grocery delivery company’s shares zoomed up to 2.27 per cent at Rs 213.80 per share on the BSE in Wednesday’s early morning trade. The share price of the company has surged 67.3 per cent in the last six months, while rallying over 182 per cent in the last one year.

Though, today’s surge in the stock price came after the company on Tuesday announced that it has pulled the plug on its plan to enter the lending business.

Zomato Financial Services, a wholly-owned subsidiary of Zomato, has withdrawn its application for a non-banking financial company (NBFC) licence with the Reserve Bank of India (RBI), stating that the company does not have plans to pursue lending in the future.

 

"ZFSL, a wholly owned subsidiary of Zomato Limited (“the Company”) at its meeting held today i.e. July 2, 2024, has decided to voluntarily withdraw the application dated April 29, 2022 submitted with the Reserve Bank of India (“RBI”) for getting certificate of registration for undertaking the business of a Non-Banking Financial Company (Type II NBFC-ND) as we do not wish to

pursue the lending/ credit business anymore," the company said in an exchange filing on Tuesday.

Financial performance

Zomato, recorded a profit of Rs 175 crore for the fourth quarter ending March 31, 2024, marking fourth consecutive quarter of profitability, a significant turnaround from the Rs 188 crore loss reported in the fourth quarter of FY23. Sequentially, Zomato's net profit increased by 26.8 per cent, rising from Rs 138 crore in Q3FY24.

For the entire fiscal year of 2023-24, Zomato reported a profit of Rs 351 crore, a notable improvement from the Rs 971 crore loss incurred in the previous year. The strong revenue performance in the quarter was supported by its quick commerce venture Blinkit, restaurant operations, and various B2B initiatives.

The company has a total market capitalisation of Rs 1.86 trillion. It is presently trading at a price to earnings multiple of 134.48 times with an earning per share of Rs 1.55. 

At 10:37 AM; the stock of the company was up 1.32 per cent at Rs 211.80 a piece on the BSE. By comparison, the BSE Sensex index was up 0.64 per cent at 79,952 levels.