Zomato is an online food delivery platform that provides users with information, menus, and food  ordering services. The shares of the startup increased over 3 percent to Rs 232 per share after the  company announced its plans to raise the platform fees to Rs 6 applicable across Delhi and Bengaluru.  Following this news the startup reached market capitalisation of Rs 2 trillion. The stock price rose by 4  percent on the BSE in intraday trade.  

The Senior vice president and research Analyst at Elara Capital, Karan Taurani mentioned that the estimated annual orders of Zomato are around 87 crore, the increase in its platform will lead to a positive impact in EBITDA to Rs 85 to 90 crore which is around 7 percent increase in profitability. If the  same charges are applied to all cities the platform fee increase will lead to 35 points in profitability.  This is the fifth time the startup has increased its convenience fees in last year from Rs 2 to Rs 5. The  startup’s Gross Order Value also increased by 3.3 percent to 80 bps in the fourth quarter of this year.  

The food-tech startup offers an online platform to provide information, menus, and food ordering services. The company operates in 23 countries along with India and it plans to expand its network across the world. The startup has scaled its operations to meet the growing demands across all sectors  and improved its profitability. The company recently expanded its ESOP pool size for its employees by  offering them over 40 million stocks under its 2014 and 2021 schemes. The startup faces competition  from other companies such as Swiggy, Food Panda India, Deliveroo, Runnr, and more.  

Zomato reported its total net profit to be around Rs 175 crore for the fourth quarter of FY24. The IIFL  securities gave a “buy” rating to Zomato with a target price of Rs 230 for each share. The firm believes that the startup’s delivery growth and approach toward profitability across the quick commerce  market will support valuations. The company intends to expand its business while solidifying its  position in the food delivery and quick commerce Market. The company offers an online website and  mobile application to offer its services.  

Conclusion: 

Zomato saw a 3 percent increase in its share following the increase in convenience fees  announcement. The market cap of the firm crossed Rs 2 trillion for this year. The company recently  expanded its employee stock option Plan by allocating 40 million stocks worth Rs 892.19 crore. The  startup plans to increase the platform charges in Delhi and Bengaluru. The orders achieved by Zomato  annually are estimated to be around 87 crore. The company also crossed the Rs 2 trillion market cap. Karan Taurani estimated the EBITDA to grow at a CAGR of 35 percent in the next two years and increase  the rates by 21 percent in the same period.