Food delivery giant Zomato on Tuesday announced that its subsidiary, Zomato Financial Services Limited (ZFSL), has decided to voluntarily withdraw its application to operate as a non-banking financial company (NBFC). The foodtech company says it no longer intends to pursue the lending business. Zomato Financial Services was incorporated in February 2022.
Following this announcement, shares of Zomato surged as much as 2.2% to hit a 52-week high of ₹213.80 apiece on the BSE in early morning trade.
The food delivery giant explained that the decision was made by the board of ZFSL, according to the statement issued in a BSE filing.
“We would like to inform the stock exchanges that the board of directors of ZFSL, a wholly owned subsidiary of Zomato Limited, 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,” Zomato states in a filing.
The company added that the decision would not have a "significant impact" on its revenue or operations, highlighting that the disclosure was made voluntarily. Zomato was reportedly in discussions with various Non-Banking Financial Companies (NBFCs) for providing working capital loans to its affiliated restaurants.
Earlier this year, another Zomato subsidiary, Zomato Payment Private Limited (ZPPL), also voluntarily surrendered its authorisation to operate as an online payment aggregator. ZPPL, established in 2021, was intended to function as a payment aggregator and a prepaid payment instruments issuer.
In May, Zomato, the food delivery giant, reported a net profit of ₹175 crore for the quarter ending March 31, 2024, a turnaround from the ₹188 crore loss reported in the same quarter of the previous year. Revenue from operations surged by 73% year-on-year to ₹3,562 crore for the fourth quarter, up from ₹2,056 crore in Q4 FY23. Sequentially, profit increased by 27% from ₹138 crore in the December quarter of FY24, while revenue grew by 8.3%.
For the full fiscal year 2023-24, Zomato achieved a profit of ₹351 crore, marking an improvement from the ₹971 crore loss in FY23. The revenue growth was primarily fueled by performances from its food delivery service and quick commerce platform, Blinkit. Zomato's food delivery business recorded revenues of ₹1,739 crore in Q4 FY24, compared to ₹1,172 crore in the corresponding period last year. Meanwhile, the quick commerce business generated ₹769 crore in revenue during the quarter, up from ₹363 crore in Q4 FY23.
"One of the key vectors for growth for us right now is store expansion. In Q4FY24, we added 75 net new stores taking our total store count to 526. For comparison, this is more than the number of stores we added in the three preceding quarters cumulatively. Including this cost of expansion, we turned Adjusted EBITDA positive in the month of March 2024. In the current quarter (Q1FY25), we expect to add another 100 stores. At this point, we are aiming to get to 1,000 stores by the end of FY25," says Albinder Dhindsa, CEO, Blinkit.
