Jefferies Downgrades Zomato To 'hold', Cuts Price Target By 18% As Quick Commerce Competition Heats Up

Jefferies downgrades Zomato to ‘hold’, cuts price target by 18% as quick commerce competition heats up

Jefferies Downgrades Zomato to ‘Hold’: Rising Competition and Stock Surge in 2024 a Concern

Global brokerage firm Jefferies has shifted its stance on Zomato, downgrading the stock to a “hold” rating. The decision comes after Zomato’s shares more than doubled in 2024, leading analysts to believe 2025 might be a year of consolidation for the stock. Jefferies also slashed its price target by 18% to ₹275, pointing to rising competition in the quick commerce space as a significant challenge.

While Jefferies acknowledged Zomato’s strong execution and growth potential, they warned that increasing competition from players like Swiggy’s Instamart, Zepto, Amazon, and others could trigger aggressive discounting strategies. This, they believe, could put pressure on Shares medium-term profitability.

The firm specifically highlighted concerns with Blinkit quick commerce arm. Jefferies halved its target multiple for Blinkit to 6x and significantly cut its EBITDA forecast for FY26-27. For Zomato as a whole, the brokerage reduced its EBITDA estimates by 12% for FY26 and 15% for FY25. Profitability estimates were also lowered by 17% for FY26 and 18% for FY27, while EPS projections took a hit of 20% for FY26 and 21% for FY27.

Despite these challenges, Jefferies noted that Zomato’s valuation isn’t “excessively expensive,” reflecting its strong fundamentals and growth opportunities.


Morgan Stanley Sees Upside, Retains ‘Overweight’ Rating

On the other hand, Morgan Stanley maintained its optimistic outlook on Zomato, reaffirming an “overweight” rating and a price target of ₹335. The brokerage was highlighted as its top pick in India’s internet sector, citing the company’s consistent focus on profitability and a robust growth trajectory.

Morgan Stanley predicts shares will achieve a 33% revenue CAGR over FY25-27, driven by an expanding base of monthly active users and improving growth visibility. The firm expressed confidence ability to navigate the competitive quick commerce landscape while maintaining its profitability.


Zomato’s Stock Performance

Amid these contrasting views, shares fell 3% on Monday, closing at ₹264.85 on the NSE. As the quick commerce battle intensifie, it faces the dual challenge of sustaining growth while defending its margins in a highly competitive market.

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