A day after releasing its Q2FY25 results, Zomato’s shares saw turbulence in early trading, first falling by about 5% as a result of profit booking. However, Zomato’s share price hit a day low of Rs 242.45, but by 10:22 am, it had risen to Rs 260.15 on the Bombay Stock Exchange (BSE).
Compared to Rs 36 crore during the same period last year, the food delivery giant’s profits for the quarter increased 389% to Rs 176 crore. Due to the quick-commerce company Blinkit’s rapid growth and better margins in the food delivery sector, revenue increased by 68% to Rs 4,799 crore.
Despite a generally positive outlook for the stock, mixed broking insights were the primary cause of the early selloff in Zomato’s shares.
The broking firm Nuvama has kept its “buy” recommendation and increased its target price from Rs 285 to Rs 325. They noted that although profitability may be delayed due to greater initial expenditures, Blinkit’s dark store expansion is moving more quickly than anticipated.
According to Nuvama, this assertive strategy is required to keep Zomato competitive in the quick-commerce market.
With a target price of Rs 330, HSBC continues to retain a “buy” rating and a bullish outlook. According to the broking, Blinkit surpassed forecasts, but Zomato’s food delivery service fulfilled expectations. They believe that Zomato’s recent fundraising initiatives are essential to maintaining its lead in a cutthroat industry.
Nomura has reiterated its “buy” recommendation and increased its target price from Rs 280 to Rs 320. They emphasised Zomato’s emphasis on rapid commerce expansion, particularly via Blinkit, and predicted a neutral EBITDA shortly.
Over FY25–26, Nomura anticipates a 20–22% YoY increase in gross order value and sees significant room for margin growth.
According to Motilal Oswal, Zomato’s meal delivery business is steady, and Blinkit presents a substantial long-term possibility, particularly in disrupting sectors like grocery and retail. With projected PAT margins of 4.7% in FY25, 8.6% in FY26, and 12.9% in FY27, the broking believes Zomato’s profit margins will increase over the next several years. With a target price of Rs 330, they kept their “buy” rating, suggesting a possible 28% increase from the current levels.
Macquarie, on the other hand, has adopted a more cautious approach, keeping its rating at “underperform” and setting a much lower target price of Rs 100. The broking voiced concerns about Zomato’s food delivery margin expansion and Blinkit’s unit economics, arguing that both are falling short of market expectations. Additionally, they highlighted possible difficulties brought on by increased rivalry in the quick-commerce sector.
Zomato’s Future Goals
Zomato is still committed to growing its infrastructure, especially in light of Blinkit’s rapid expansion of its network of dark stores. By December 2026, the company is expected to have 2,000 dark shopfronts. Furthermore, Zomato’s commercial portfolio will be further strengthened in the upcoming weeks with the release of its District app, which will combine its “Going Out” services.
Zomato is still well-positioned in the quick-commerce and meal delivery sectors, despite some short-term profitability worries. Several brokerages predict robust growth and higher profits over the coming years.
Positive momentum is demonstrated by Zomato’s stock recovery and impressive Q2FY25 earnings, which are supported by a thriving quick-commerce industry and stable food delivery margins.
The majority of brokerages have an optimistic outlook, predicting a significant upside in the stock price, while other analysts remain cautious owing to pressure from competition. As Zomato continues to negotiate a very competitive market, investors should consider both the long-term potential and the immediate difficulties.
