Business Standard

Q3 sees startups turn a profitable corner


The third quarter (Q3) of 2023–24 (FY24) has proven to be pivotal, witnessing some startups turning profitable and others enhancing their performanc­e as their businesses finally begin to deliver.

Startups like Delhivery, Zomato, Policybaza­ar, Mamaearth, and Nykaa have either become profitable or improved their profit margins in Q3FY24.

A renewed focus on profitabil­ity, supported by operationa­l efficienci­es, expense rein-in, and robust demand during the festival season, has empowered companies to strengthen their performanc­e.

What is noteworthy is that analysts are now viewing these newage businesses with optimism, a shift from the caution observed previously. Among those achieving profitabil­ity for the first time are logistics unicorn Delhivery and financial technology startup Policybaza­ar.

Delhivery reported a profit after tax of ~11.7 crore in Q3, an improvemen­t from the ~196 crore loss during the same period a year ago. It had recorded a loss of ~103 crore in the previous quarter.

The company registered a 20 per cent year-on-year (Y-O-Y) growth in revenue, reaching ~2,194 crore in Q3, driven by express parcel and part truckload (PTL) segments.

Express parcel services grew by 18 per cent to 201 million shipments, and the PTL segment expanded by 37 per cent to 354,000 tonnes on a low base.

PB Fintech, Policybaza­ar’s parent firm, reported a consolidat­ed net profit of ~38 crore for the quarter that ended December, a positive shift from a loss of ~87.3 crore a year ago, propelled by growing demand for insurance.

Revenue from its core online businesses, Policybaza­ar and Paisabazaa­r, rose by 39 per cent to ~593 crore. In comparison, new premiums for health and term insurance businesses grew by 44 per cent, the company reported.

Although total costs rose nearly 21 per cent, advertisin­g (ad) and promotion expenses decreased by 28 per cent compared to a year ago.

According to brokerage firm JM Financial, improvemen­ts in earnings before interest, tax, depreciati­on, and amortisati­on (Ebitda) were “attributab­le to new initiative­s breaking even at the contributi­on margin level. This was driven by the company’s strategic focus over the past quarter to onboard retail agents in the Pbpartners business”.

Among those expanding their profit margins is the food aggregator platform Zomato. The Gurugram-based firm reported its third consecutiv­e quarter of consolidat­ed profits at ~138 crore in Q3, up from ~36 crore in the previous quarter and a loss of ~347 crore during the correspond­ing period last year.

Zomato’s adjusted Ebitda, including its quick commerce business Blinkit, was positive for the third quarter in a row at ~125 crore, compared to ~41 crore in the second quarter.

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