earnings: Listed startups get a delivery of reality: It’s hot on the Street

ET Intelligence Group: The December quarter results paint a mixed picture for consumer focused prominent startups. While firms like Ixigo, Nykaa, and Honasa Consumer reported robust revenue growth and market expansion, others like Swiggy, Ola Electric, and Mobikwik faced profitability challenges due to heightened competition and increased expenditures. The tide is expected to turn for some of the companies including Swiggy and Mobkwik over the next few quarters. ETIG offers a snapshot of key takeaways from the recently concluded results season for each of these startups.

Zomato

Shares of Zomato were under pressure after the food delivery and quick commerce company reported a decline in profit driven by aggressive spending on Blinkit’s dark stores, though revenue growth was strong. Blinkit added 216 dark stores in the third quarter taking the total to 1,007. It has accelerated plan to expand Blinkit’s store network to 2,000 in 2025, a year earlier than planned. That may affect overall profitability. Elara Capital has reduced Blinkit’s enterprise value (EV) multiple relative to sales to four times from earlier six times due to delayed profitability amid increased competition.

Swiggy
The net loss of the food delivery and quick commerce company widened for the quarter amid rapid business expansion. Total expenses accelerated in the nine-month period from the six-month period compared with the revenue growth. The company expects to turn operations profitable with an operating margin before depreciation and amortisation (EBITDA margin) target of 5% by the December 2025 quarter. Motilal Oswal Financial Services projects food delivery orders to grow at a slower rate annually compared to quick commerce.

FSN E-Commerce
FSN, which owns beauty retail brand Nykaa, posted a double-digit revenue and profit growth for the December 2024 quarter, driven by higher gross merchandise value (GMV). Marketing and advertising expenses relative to sales increased by 130 basis points to 13.2% year-on-year. According to Elara Capital, intensifying competition in quick-commerce may weigh on Nykaa’s growth in the near-to-medium term though profitability may improve with lower discounting and reduced losses in the fashion segment.

Ola Electric
Ola Electric reported higher net loss amid falling revenue year-on-year. Though it maintained a strong market share of 25.5%, deliveries at 84,029 units were the lowest since the past four quarters following competitive intensity and service challenges. After expanding gross margin by 220 basis points year-on-year to 20.8%, the company expects to improve it further aided by cost reduction and improved product mix. To take advantage of rising penetration of two-wheeler electric vehicles, it has launched new motorcycle models with deliveries starting from March 2025.FirstCry
FirstCry’s parent Brainbees Solutions reduced net loss in the first nine months of FY25 to ₹153.3 crore from ₹278.3 crore in the year-ago period. The growth rate of annual unique transacting customers for the online retailer of baby and kid products accelerated to 17% from 12% in FY24. The company expects to improve operating profit across all business lines over the next few years driven by the shift from unorganised to organised retail.

Honasa Consumer
The personal care company that owns the Mamaearth brand is in the process of changing the distribution strategy to improve efficiency. It increased the proportion of direct distribution to 69% of sales from 38% in FY24 and reduced the dependence on large stockists. The company continued to strengthen its market position in face wash and shampoo segments, expanding its retail distribution by 22%, while quick-commerce sales surged over 200% year-on-year. Emkay Research expects revenue to grow by 50% annually between FY23 and FY26, with steady improvement in profitability.

Ixigo
Le Travenues Technology, the online travel bookings company which owns Ixigo, is confident to deliver better numbers in the March quarter driven by the Mahakumbh in Uttar Pradesh. The travel platform reported lower net profit year-on-year but showed a sequential improvement. Revenue showed strong growth supported by higher gross transaction value (GTV).

JM Financial Institutional Securities in a report highlighted Ixigo’s market outperformance driven by strong presence in smaller cities and cross-selling across its apps compared with the peers. The brokerage expects Ixigo’s GTV to grow by 26% between FY24 and FY27. MOBIKWIK Mobikwik reported a net loss of Rs 55.28 crore for the third quarter compared with a profit of Rs 5.3 crore in the year-ago quarter. The gross merchandise value (GMV) grew three times year-on-year to Rs 29,446 crore.

The firm posted loss at the EBITDA level due to lower financial services revenue and higher lending related costs amid transition to new default loss guarantee (DLG) contracts where a larger portion of the costs are incurred in the initial period.

The DLG contracts are agreements between MobiKwik and banks that specify how MobiKwik will compensate the bank in the case of loan default. The company remains optimistic about long-term benefits from its UPI wallet infrastructure, which has shown traction in adoption.