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Jefferies has cut its price target on Zomato to ₹275 from ₹335 earlier, an 18% cut. The revised price target is nearly at par with Zomato’s closing price on Monday. Shares of Zomato are down 13% from their all-time high levels of ₹304.
The brokerage wrote in its note that rising competition in the Quick Commerce space is a worry on the company’s profitability. Apart from Zomato’s Blinkit, Swiggy’s Instamart, Zepto, Amazon, and other players are also vying for a piece of the Quick Commerce pie.
Zomato’s shares could see a year of consolidation in 2025 after the stock more than doubled in value in 2024, according to Jefferies, who added that the stock’s valuations are not “excessively expensive” in the context of the strong execution and opportunity. However, the rising competition in the Quick Commerce space worries them.
Aggressive moves by incumbents and the entry of new players will most likely result in higher discounting, which may in turn pose a threat to the medium-term profitability, according to the Jefferies note.
As a result, Jefferies has cut Blinkit’s Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) forecast sharply over financial year 2026 and 2027 and also halved its target multiple for the same to 6x.
For Zomato overall, Jefferies has cut its EBITDA estimate by 12% for financial year 2026 and by 15% for financial year 2025. The profitability estimate has been cut by 17% for financial year 2026 and by 18% for financial year 2027.
Jefferies has also cut Zomato’s Earnings Per Share (EPS) estimates by 20% for financial year 2026 and by 21% for financial year 2027.
Out of the 26 analysts that have coverage on the food delivery aggregator, 23 of them now have a ‘Buy’ recommendation, Jefferies has a hold, while the other two have a ‘Sell’ rating.
Shares of Zomato ended 3.2% lower on Friday at ₹264.6.
First Published: Jan 7, 2025 6:27 AM IST
