Zomato, Nykaa see tepid growth as consumption slows

- Inflationary pressure, slowing GDP growth

- Mostly B2C firms are stumbling

- B2C firms in bearish mode on bourses

- B2B firms may post good performance for Q4

Bengaluru: New age e-commerce companies like Zomato, Nykaa, Delhivery are likely to post subdued set of numbers in the fourth quarter of FY23 as consumers turn cautious on spending owing to inflationary pressure and slow GDP growth estimates.

According to industry experts, while B2C (business-to-consumer) companies are stumbling, B2B (business-to-business) firms are expected to post good performance during this period.

“Third quarter was a difficult quarter for most B2C e-commerce companies and investors were expecting recovery in Q4FY23. However, our channel checks indicate B2C growth may underwhelm expectations. We note signs of consumption fatigue across online food ordering and e-commerce. This is in contrast to the buoyancy in some offline discretionary categories such as travel and hospitality. We believe this is due to wallet share recalibration among different consumption baskets and sustained trend of online-to-offline migration,” ICICI Securities wrote in a note.

The brokerage firm projected flattish growth in food delivery GOV (gross order value) in Q4 for Zomato given a seasonally weak quarter and online consumption fatigue trends. However, the food delivery firm’s new businesses including Hyperpure and Blinkit are likely to grow 30 per cent over the previous quarter. Under Hyperpure, Zomato provides supplies to restaurants, while it does grocery delivery under Blinkit, which was formerly known as Grofers.

Similarly, online fashion product seller Nykaa is likely to witness decline in sales growth sequentially. “Q4 is historically a weak quarter for Nykaa along with online consumption fatigue. The management’s decision to activate a new sale event in fourth quarter was to counter these headwinds,” ICICI Securities wrote in the note.

New age logistics firm, Delhivery has seen tepid demand growth in the fourth quarter of last financial year. The company is likely to report a fall in shipment volume year-on-year basis. Meanwhile, B2B businesses such as Just Dial and Nazara Technologies are expected to post good performance during the quarter. “We estimate revenue to grow 64 per cent in Q4, which will be led by sustained strong growth in e-sports (97% y-o-y), gamified early learning (22% y-o-y) and ad-tech segments,” the brokerage firm wrote.

Similarly, Just Dial is witnessing strong growth for its services among small and medium enterprises with management’s decision to increase exposure in B2B ecommerce space.

The share prices of recently listed B2C businesses continued to trade below their issue prices. Even, B2B businesses were not able to get investors’ interest after their bumper listing in exchanges last year and before.