Key Points
Zomato Ltds shares have gained as much as 15% since its September quarter (Q2FY24) results surpassed expectations, particularly on growth..
This was largely driven by its loyalty programmeZomato Gold where the members doubled to 3.8 million..
A Gold order is relatively less profitable due to factors such as high delivery cost, priority service to Gold members and cost due to the no-delay guarantee benefit available to Gold members..
In this backdrop, Nomura Financial Advisory and Securities (India) believes that it will be a challenge for Zomato to achieve double-digit contribution margin with high growth in the long term..
The good run may well continue if Blinkit turns profitable and the food delivery business sustains its growth rates..
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