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Zomato shares surged as much as 6.5% on Thursday to cross the mark of ₹300, making a new high of ₹304.65. The stock has now gained in seven out of the last nine trading sessions. The stock has gained 24% in the last one month.
Shares of Swiggy too are up for the fourth day running, extending their gains despite reporting a net loss during the quarter. The management gave timelines towards profitability, which the street appears to be appreciating.
However, Jefferies, has raised some concerns with regards to the profitability prospects of this company.
It said that it created a customised product basket with an MRP of ₹11,500, comprising of staples, personal care, F&B, home care, dairy products etec.
The average discount across categories stood at 14%, with 26% for personal care and 8% on dairy products.
Jefferies said that aggressive discounting by new players including Amazon Tez may require existing players to respond.
“This poses risk to the consensus’ profitability estimates and see pressure on the entire ecosystem to shorten the delivery timeline,” Jefferies wrote in its note.
The brokerage added that modern trade and general trade is also likely to be impacted as quick commerce offers more value.
Jefferies has a “buy” recommendation on Zomato with a price target of ₹335. It does not have a rating on Swiggy so far.
Zomato shares are trading 4.7% higher at ₹299.8, while those of Swiggy are trading 6.1% higher at ₹550.
