The stock price of Zomato is experiencing a significant decline, learn why it is doing so and till when?
Zomato’s shares experienced a 5% decline, dropping to an intra-day low of Rs 251.55, following a downgrade from brokerage house Jefferies. The stock was downgraded from a ‘Buy’ to a ‘Hold’ rating, with a target price of Rs 275, indicating limited upside potential from current levels.
Jefferies’ concerns revolve around the quick-commerce company’s profitability, as it has reduced Zomato’s FY26-27 consolidated EBITDA by 12% to 15% due to increasing competition in the market. The brokerage also anticipates a rise in discounting, with examples like Zepto Super Saver and Flipkart Minutes offering significant discounts. This discounting war poses a threat to Zomato’s medium-term profitability, according to Jefferies.
On the other hand, Morgan Stanley has maintained an Overweight rating on Zomato, with a target price of Rs 355. Despite the competitive landscape, Morgan Stanley foresees a 33% revenue growth during FY25-27, citing Zomato’s track record of profitability and consistent share gains in monthly active user metrics.
Bernstein Research also expressed optimism about the company’s future, highlighting the company as the biggest beneficiary in the quick-commerce sector. The brokerage firm has given Zomato an ‘Outperform’ rating and a target price of Rs 335, making it their top internet pick.
Overall, Zomato’s share price performance has been influenced by conflicting views from different brokerage houses, with Jefferies expressing concerns while Morgan Stanley and Bernstein Research remain optimistic about the company’s growth potential.
Analysis of quick commerce company’s stock performance reveals a significant decline of over 24% in January, following a remarkable surge of nearly 125% in 2024. The stock hit a low of Rs 121.70 in January and reached a high of Rs 304.50 in December 2024. Zomato’s inclusion in the Sensex, replacing JSW Steel on December 23, marked a significant milestone.
Comparing its performance to the Nifty 50 index, the stock has experienced a notable decrease of almost 10% in the past five trading days. Investors have seen a decrease of 14.5% in their wealth over the previous month. Despite these recent declines, Zomato has delivered a return of 21.5% in the last six months.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.