Despite Increased Net Loss, Zomato To Invest $1 Billion in Startups

Food aggregator company Zomato Ltd (NS:ZOMT) has announced that it will invest $1 billion into different quick-commerce space companies over the upcoming 2 years, despite reporting a widening consolidated net loss of Rs 434.9 crore for the September-ending quarter.

Zomato is going big on its investment drive in different companies, focusing more on quick-delivery startups and similar digital platforms, to grow the company's core food business.

A major contributor to the widening loss of Rs 434.9 crore recorded by Zomato for the September quarter is its increasing investments focused on the growth of its food delivery business.

Zomato is currently in the process of selling its sports arena finder platform Fitso to Curefit for $50 million, which along with an additional cash investment of another $50 million will fetch Zomato a shareholding of 6.4% in Curefit, or $100 million.

Besides, the food delivery major is also investing $75 million in the logistics startup Shiprocket to acquire an 8% stake in the company and a separate $50 million in the local shopping and savings platform Magicpin for an acquisition of 16% stake.

In August, the Gurugram-based food delivery startup had invested $100 million in Grofers, taking the total investment count of the company to $275 million across 4 companies in a 6 month period.

Zomato CEO Deepinder Goyal believes that it is important to make investments of this volume for a robust long term value drive.

Other reasons for the increased losses include branding and marketing for customer acquisition, increased investments in growing geographies, and rising delivery costs due to an increase in fuel prices and weather unpredictability.

Zomatos delivery cost/order surged by Rs 5 sequentially.