Zomato: Zomato is aggressively expanding its quick commerce business, Blinkit, by rapidly increasing its network of stores. This growth has significantly raised investment costs, leading to higher losses for Blinkit and reducing Zomato’s overall net profit for Q3. Despite these challenges and a sharp drop in Zomato’s stock—down over 12% since the Q3 results—brokerages remain optimistic about its prospects.
As of 9:23 AM, Zomato shares traded at ₹224.15 on the NSE, recording a 9% drop in today’s session, its steepest since June 2024. Nomura acknowledged the fierce competition in the quick commerce market but believes Blinkit is poised to secure a leading position due to strong execution and a healthy balance sheet.
Similarly, Jefferies lauded Blinkit’s operational strengths and supported Zomato’s store expansion plans, aiming to double Blinkit’s store count to 2,000 by December 2025, a year ahead of schedule. However, Jefferies lowered its price target by 7% to ₹255, retaining a ‘hold’ rating due to Zomato’s weakened profitability.
Bernstein also endorsed Zomato’s expansion strategy, highlighting the food delivery segment’s better-than-expected Q3 margins and maintaining an ‘outperform’ rating with a price target of ₹310. The firm attributed recent stock corrections to heightened competition in the quick commerce sector.
Nuvama Institutional Equities mirrored this positive sentiment, noting that Blinkit’s rapid store additions are fueling growth, although short-term profitability may be hampered by upfront costs. Nuvama adjusted its price target for Zomato to ₹300 while maintaining a ‘buy’ recommendation, citing long-term profitability gains as the new stores mature.
Zomato reported a 57% year-on-year decline in Q3 net profit to ₹59 crore, down from ₹138 crore, primarily due to increased spending on Blinkit’s expansion. However, revenue from food delivery rose by 22%, and Blinkit’s revenue more than doubled during the quarter. Zomato acknowledged that despite improved food delivery margins, quick commerce investments led to a ₹95 crore quarterly increase in losses.