Despite Zomato’s shares on Tuesday falling 10.91% to Rs 214.65 on the BSE, brokerages remain optimistic about the company’s long-term prospects.
Analysts attribute the stock’s slide to short-term pressures from the company’s aggressive expansion of dark stores for its quick-commerce arm, Blinkit. However, they maintain that this strategy positions Zomato for sustained growth.
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For instance, Motilal Oswal views Blinkit’s rapid scaling as a “generational opportunity” in transforming industries such as retail, grocery, and e-commerce. Similarly, Nomura highlighted near-term profitability challenges but emphasised Zomato’s strong execution and projected that its adjusted Ebitda margin could climb to 5.3% by FY26, surpassing earlier guidance. Bernstein reaffirmed its “outperform” rating with a price target of Rs 310, while Jefferies retained a “hold” rating with a target of Rs 255, citing Blinkit’s solid market positioning despite intensifying competition.
In its October-December quarter earnings declared on Monday, Zomato has set an ambitious target of doubling Blinkit’s store count to 2,000 by December 2025, a move analysts believe will cement its leadership in the quick-commerce sector. Nuvama Institutional Equities echoed this sentiment, stating that while the upfront costs for dark store expansion are inflating losses, maturing stores will lead to stronger profitability in future quarters.
On the operational front, Blinkit showed robust performance, with a 117% revenue increase year-on-year to Rs 1,399 crore and a 120% rise in gross order value (GOV) to Rs 7,798 crore. However, Blinkit’s adjusted Ebitda loss widened to Rs 103 crore, up from Rs 89 crore in the same period last year.
Zomato’s consolidated revenue from operations rose significantly to Rs 5,405 crore from Rs 3,288 crore in Q3 FY24. Despite this growth, the company’s net profit fell to Rs 59 crore, reflecting the costs of Blinkit’s rapid scaling. Analysts believe these challenges are temporary, with Zomato’s expansion strategy expected to drive sustainable growth and profitability in the coming years.
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While the stock faces short-term headwinds, analysts remain confident in Zomato’s ability to leverage its competitive advantages and navigate the evolving quick-commerce landscape effectively. Meanwhile, Zomato’s rival food tech firm, Swiggy’s shares on Tuesday also fell 8.08% to Rs 440.30 on the BSE.
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