On January 7, 2025, Zomato’s shares tumbled by 5%, closing at an intra-day low of ₹251.55 on the Bombay Stock Exchange (BSE). This marks a significant downturn, with the stock losing nearly 16% of its value over the past month. The decline comes after Jefferies, a global brokerage firm, downgraded Zomato’s rating from ‘Buy’ to ‘Hold’, citing concerns over rising competition in the quick commerce market.
Jefferies also slashed the target price by 18% to ₹275, reflecting limited upside from its previous target of ₹335. Analysts at Jefferies noted that 2025 might be a consolidation year, following the stock’s remarkable 98.76% return in 2024.
Zomato Shares Key Highlights:
- Rising Competition: Players like Swiggy Instamart, Zepto, and Amazon are increasing their focus on the quick commerce space, creating pricing and market share challenges for Zomato.
- Profitability Concerns: Jefferies reduced Blink It’s valuation multiple to 6x and cut consolidated EBITDA projections by 12-15% for FY26-27. Earnings per share (EPS) estimates were also revised downward by 20-21%.
- Zomato’s Stock Performance: Despite delivering a 98.76% return in 2024, analysts expect 2025 to be a year of price consolidation.
Contrasting Views from Brokerages
While Jefferies issued a cautious outlook, Morgan Stanley maintained an ‘Overweight’ rating with a ₹335 target price, citing Zomato’s strong execution and a projected 33% revenue CAGR for FY25-27. Similarly, Elara Securities expressed optimism about Blanket’s market leadership due to its higher order values and assortment strength.
Quick Commerce Expansion
The quick commerce sector is expanding beyond top-tier cities into Tier 2 and Tier 3 locations, with Zomato scaling Blinkit operations to 45-50 cities and aiming for over 1,000 stores by FY25. Swiggy’s Instamart has grown to 54 cities, with plans to reach 75 cities by year-end.
Zomato Shares Future Outlook
Zomato’s profitability may face short-term headwinds due to competitive pressures. However, the company’s focus on scaling operations and improving growth visibility could drive long-term gains.
