Zomato stock drops 5% as Macquarie sees nearly 50% downside due to fierce competition

Macquarie's view are contrarian to Goldman Sachs' recent valuation, which assigned Zomato's quick commerce arm an even higher multiple than its flagship food delivery business.

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26 Aug, 2025 12:21

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Zomato shares fell over 5 percent on May 31 after foreign brokerage Macquarie forecast nearly 50 percent decline in the food delivery platform's share price in the next 12 months owing to increased competition in the quick commerce sector.

At 11.33 am, shares of Zomato were trading at Rs 173.80 apiece on the NSE.

The brokerage reiterated its "underperform" stance on Zomato, assigning its stock a price target of Rs 96, implying a potential downside of 46 percent from Thursday's close.

Macquarie has held on to its 'underperform' rating on Zomato since May last year when it had downgraded it from its previous 'neutral' call. It's also worth noting that Macquarie's 'underperform' call on Zomato is equivalent to a 'sell' call, making it one among the only three brokerages advising investors to exit the stock.

Analysts at Macquarie highlighted increasing competitive pressure as the main driver of their caution, particularly with JioMart's plans to offer 30-minute grocery delivery in multiple cities, starting next month and expanding further.

Reliance Industries-owned JioMart plans to initially provide 30-minute grocery services in eight cities and then expand to the top 20-30 cities across the country during the first phase.

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Macquarie also sees a downside to both consensus forecast and margins for "Blinkit", presenting a contrarian view to Goldman Sachs' recent valuation, which assigned Zomato's quick commerce arm an even higher multiple than the company's flagship food delivery business.

Meanwhile, Blinkit turned EBIT positive in the March quarter of FY24, with revenue more than doubling year-on-year to Rs 769 crore.

Zomato reported a net profit of Rs 175 crore for the same period, showcasing a sharp improvement from a net loss of Rs 188 crore in the year ago quarter. The spike in net profit was also aided by a 37 percent rise in its other income to Rs 235 crore.

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