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 carry on the lending business. Zomato Financial Services was incorporated in February 2022.
Following this announcement, shares of Zomato rose as much as 2.2% to hit a 52-week high of ₹213.80 apiece in early morning trade on the BSE.
The food supplier said the decision was taken by the board of ZFSL, according to a statement published in a BSE document.
“We would like to inform the exchanges that the Board of Directors of ZFSL, a wholly owned subsidiary of Zomato Limited, at its meeting held today on July 2, 2024, has decided to voluntarily withdraw the application dated April 29, 2022 with the Reserve Bank of India (RBI) for obtaining a certificate of registration to carry on the business of a Non-Banking Financial Company (Type II NBFC-ND) as we no longer wish to carry on the lending business,” Zomato said in a statement.
The company added that the decision would not have any “significant impact” on its revenue or operations, stressing that the announcement was made voluntarily. Zomato was reportedly in talks with various non-banking financial companies (NBFCs) to provide working capital loans to its affiliated restaurants.
Earlier this year, another Zomato subsidiary, Zomato Payment Private Limited (ZPPL), also voluntarily surrendered its license as an online payment aggregator. ZPPL was incorporated in 2021 and was meant to act as a payment aggregator and issuer of prepaid payment instruments.
In May, food delivery giant Zomato reported a net profit of ₹175 crore for the quarter ended March 31, 2024, a turnaround from the loss of ₹188 crore in the same quarter last year. Revenue from operations rose 73% year-on-year to ₹3,562 crore in the fourth quarter of fiscal 2023, up from ₹2,056 crore in the fourth quarter of fiscal 2023. Quarter-on-quarter, profit rose 27% from ₹138 crore in the December quarter of fiscal 2024, while revenue rose 8.3%.
For the full fiscal year 2023-24, Zomato posted a profit of Rs 351 crore, an improvement from the loss of Rs 971 crore in FY 2023. The revenue growth was mainly driven by the performance of its food delivery service and quick commerce platform Blinkit. Zomato's food delivery business posted revenue of Rs 1,739 crore in the fourth quarter of FY 2024, compared to Rs 1,172 crore in the corresponding period last year. Meanwhile, the quick commerce business generated revenue of Rs 769 crore in the quarter, compared to Rs 363 crore in the fourth quarter of FY 2023.
“One of the key growth vectors for us right now is store expansion. In Q4 FY24, we opened a net 75 new stores, bringing our total to 526. For comparison, that's more than the number of stores we opened in the three previous quarters combined. Including these expansion costs, we achieved positive adjusted EBITDA in March 2024. In the current quarter (Q1 FY25), we expect to open an additional 100 stores. At this point, our goal is to reach 1,000 stores by the end of FY25,” says Albinder Dhindsa, CEO of Blinkit.
