Zomato gains over 4% as company hikes platform fee by 25% to ₹5 per order

Zomato Ltd shares jumped more than 4% on Monday, April 22, after the company increased the platform fee by 25%. The hike, as per media reports, is effective in select cities, including Delhi-NCR, Bengaluru, Mumbai, Hyderabad and Lucknow.

The company has increased the platform fee for food delivery to ₹5 per order effective April 20. Last time, Zomato raised the platform fee to ₹4 from ₹3 in January.

Zomato shares gained as much as 4.49% to an intraday high of ₹197.7 apiece on the NSE after media reports suggested the hike in platform fee by the food delivery giant.

Apart from delivery charges, Zomato levies platform fee per order to customers. While the delivery charge is free for Zomato Gold subscribers, the platform fee applies to them.

The 25% upward revision in platform fees is expected to boost Zomato's margin and profitability. The ₹1 increase in platform fee would mean a boost of about ₹85-90 crore in EBITDA as the company delivers around those many orders per annum, according to reports. However, it will happen after the company raises the platform fee for all regions.

Its main rival, Swiggy, already charges a platform fee of ₹5 per order.

When searching for its intercity delivery service 'Intercity Legends', the company on its app says, "Enhancements are underway! Please stay tuned as we will be back to serve you soon".

Zomato share price has seen strong gains in the last one year. At the current market price, the stock is up over 250% over the last year.

Zomato share price hit its 52-week high of ₹199.7 on April 12 and saw some profit booking in the subsequent session.

Meanwhile, in an exchange filing on April 19, the company said that it received a GST demand for the period July 2017 to March 2021.

"The company has received an order for the period July 2017 to March 2021 passed by Additional Commissioner, Central Goods and Services Tax, Gurugram raising demand of GST of ₹5,90,94,889 with applicable interest (not quantified) and a penalty of ₹5,90,94,889," the company said.

Zomato said that the GST demand is not expected to have an impact on the company's finances.

Zomato is expected to release its March quarter earnings in the coming weeks. In Q3, the company reported a net profit of ₹138 crore. Zomato's food delivery business reported a 30% YoY increase in adjusted revenue, reaching ₹2,025 crore on a consolidated basis.