Zomato Faces Financial Challenges Amidst Long-Term Growth Potential and Liquidity Concerns

Zomato Ltd, a prominent player in the IT - Software industry, has recently undergone an evaluation adjustment that reflects its current financial standing. The company reported flat financial performance for the quarter ending December 2024, with a notable decline in profit after tax, which fell to Rs 59.00 crore, marking a significant change of -68.2%. Additionally, Zomato's cash and cash equivalents reached their lowest point at Rs 506.00 crore, indicating potential liquidity concerns.
The company's ability to service its debt is under scrutiny, highlighted by a Debt to EBITDA ratio of -1.00 times, which raises questions about its financial health. Furthermore, the negative return on capital employed (ROCE) suggests challenges in generating returns from its investments.

Despite these hurdles, Zomato has demonstrated healthy long-term growth, with net sales increasing at an annual rate of 69.77% and operating profit growing at 25.18%. The stock has also shown resilience, generating a return of 32.04% over the past year, outperforming the broader market, which experienced negative returns of -1.20%.

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