Zomato continues to watch ONDC progress closely; claims it gained market share in Jan-Mar

Zomato on Friday reported a 70% year-on-year jump in its operational revenue for the March-quarter to Rs 2,056 crore, and its net loss narrowed to Rs 187.6 crore in the quarter, compared to Rs 359.7 crore in the year-ago period.

Goyal also pointed out that despite a sequential fall in gross order value (GOV) for its food delivery vertical, the company believed it has gained market share in the March-quarter as well as the year-ended March 2023.

“At Zomato, we welcome all innovations that could help the restaurant industry in India grow. We continue to watch the ONDC progress closely and learn from it,” he said in the company’s shareholder’s letter.

Notably, Gurgaon-based startup Magicpin, in which Zomato owns 15% stake, is among the biggest seller side apps on ONDC.

Over the last week, however, several brokerage firms pointed out that food delivery apps like Zomato and Swiggy faced little threat from ONDC’s entry. A report by JM Financial earlier this week pointed out that ONDC in its current shape and form was nowhere close to disrupting the online food delivery industry.

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On May 12, Jefferies published a report that the benefits of scale enjoyed by Zomato and Swiggy could outweigh the open protocol and resource pooling offered by the ONDC when it comes to food delivery.Zomato’s March-quarter food delivery GOV stood at Rs 6,569 crore, down from Rs 6,680 crore in the December quarter. The adjusted revenue for the vertical also fell to Rs 1,530 crore from Rs 1,565 crore in the same period.

“The quarterly growth is low because of the demand slowdown we witnessed in our business from late October last year till the end of January this year. As we had mentioned in our last letter, we had started seeing green shoots of recovery in the first week of February 2023. That recovery has continued and the business has grown well since then and the same should reflect in better GOV growth in the next quarter,” Zomato’s CFO said.

He added that there were two other factors that impacted growth in the quarter. Firstly, February being a shorter month had a negative impact of 2.2%, and the shutdown of approximately 225 cities by the company in January had a negative 0.3% impact.

“We believe we have gained market share in the last quarter and also in the last financial year (FY23),” Goyal said.