Explained: Why is Zomato Down Today? Know Key Reasons

Shares of Zomato declined by 8.7%, to ₹218.95, intra-day after the food aggregator reported a dip in its net profit in Q3FY25. On January 20, the company posted a net profit of ₹59 crore in the December quarter, down 57.2% from the corresponding quarter a year earlier. On a sequential basis, the profit has fallen by 66.5%. Zomato’s net profit in Q2 FY25 was ₹176 crore. Revenue from operations soared 64% YoY to ₹5,404 crore in Q3 FY25.

Brokerage Views

Macquarie

The brokerage reiterated that the food aggregator has limited margin of safety due to heightened competition in the Quick-commerce space, which is “denting consensus forecasts.” It also estimated a gross order value of Blinkit to surge by 3.5 times in the span of three years. It has set a target price of ₹130, while maintaining ‘underperform’ rating on the stock.

UBS

The brokerage said that despite declining food delivery, Zomato’s margin expansion beckons a positive start. It also expects Blinkit’s gross order value to more than double in FY25 and FY26. Additionally, cut throat competition in the quick-commerce space may lead to decline in marginal margin in Blinkit. Brokerage set a target price of ₹320 by giving a ‘buy’ rating on the stock.

Nuvama

The brokerage believes that higher upfront costs for opening of dark stores may affect profitability in the short term. Setting a target price to ₹300, brokerage has maintained ‘buy’ rating on the stock.

How has the stock performed?

Zomato has declined over 9% in the last five trading sessions, including today’s correction. The stock has wiped out 21% of investors’ wealth in the last one month and 2.3% in the past six months. However, it has given returns worth 66% in the last one year. As of 12:30 pm, Zomato is trading at ₹216.90, down 9.53%.