ET Intelligence Group: Zomato's September quarter performance is a mixed bag. While the food delivery company posted 68% growth in revenues, it is the lowest increase in the past eight quarters. Its net profit of ₹176 crore stands much higher than the year-ago level of ₹36 crore but lower than the Street expectation of around ₹250 crore and a decline of 30% sequentially.The company reported an operating profit of ₹226 crore in the quarter against the year-ago loss of ₹47 crore. The operating profit margin stood at 4.7% for the quarter. The improved profitability comes on the back of food delivery margins firming up and quick commerce margins staying near break-even despite the store network expansion.114482757The company's domestic food ordering delivery business - its largest business segment contributing 42% to its revenues - grew by 30% year-on-year. The segment's profit rose by 66%. The gross order value in this business grew 21% YoY.The revenues of its quick commerce business Blinkit - constituting 32% of the total sales - more than doubled YoY. From a year-ago loss of ₹94 crore, it has swung to a segmental profit of ₹48 crore during the quarter. The unit added 152 new stores against 28 a year ago. However, the new stores and warehouses take a few months to ramp up and hence are margin-dilutive in the short term. The company is focused on growing the market share of Blinkit (in the top eight cities) amidst heightened competition.The revenues of its other two businesses - Hyperpure (B2B supplies) grew 98%, and Going Out (events ticketing) surged by 214%. While the former is loss-making, the latter earned a segmental profit of ₹18 crore.The company's cash balance is down to ₹10,813 crore from ₹14,400 crore at the time of the IPO. The board has approved a fundraising of ₹8,500 crore through a QIP in a bid to strengthen the balance sheet at a time when its competitors are raising funds.The company is launching the District app in the next four weeks to help migrate its existing 'going-out' services from the Zomato and Paytm platforms to the app. The Zomato stock price has more than doubled in the past year mirroring the company's on-ground performance.While the fast-growing company's business model has been validated and new businesses have also performed well, there are threats such as intensifying competition, viability of new store expansion, slower ramp-up of the District app, integration issues related to the acquired ticketing business from Paytm as well as sustainability of the current strong consumer demand.The management has not yet seen any visible sign of a slowdown in consumer demand even as other consumer businesses are reporting an adverse impact of subdued demand. The Zomato stock is trading at a high PE of 391 making it vulnerable to any adverse business conditions.