Zomato's current performance is a function of the COVID-19 pandemic, said Karan Taurani of Elara Securities, on Wednesday, while also asking that how sustainable is the current revenue growth is difficult to say.

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Food delivery aggregator Zomato on Tuesday, August 10, reported a consolidated loss of Rs 356.2 crore during the quarter ended June 30, 2021, as against Rs. 99.8 crore in the year-ago quarter. The company's adjusted revenue grew 26 percent quarter-over-quarter (QoQ) to Rs 1,160 crore. Consolidated revenue, however, stood at Rs 844.4 crore for the quarter under consideration against Rs 266 crore for the same period a year ago.

While EBITDA losses almost halved compared to during pandemic times, is this sustainable, asks Taurani.

“These are all pandemic trends, we cannot talk in terms of how sustainable is revenue growth currently. The cash burn or EBITDA losses almost halved as compared to what it was during pandemic times, but going ahead, whether this is sustainable or not is what needs to be watched out for because if you have to increase frequency from a customer, you have to push for more amount of discounting,” he told CNBC-TV18.

The risk-reward is not favourable for Zomato right now, with the food delivery aggregator’s commission revenue has come down to 18.5 percent from 20 percent, Taurani added.

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He mentioned that if the trend shifts from delivery to dine-in then Zomato’s average order value won’t sustain.

“That’s the trend to watch out in coming quarters as to how revenue consumption happens as far as dining-in is concerned, how the trend shifts from delivery to dine-in, and what kind of impact Zomato will see. Then we can come to a number that on a steady-state basis Zomato has to grow at.”

For the entire interview, watch the video

(Edited by : Ajay Vaishnav)

First Published:Aug 11, 2021 1:18 PM IST