- By Aditya Pratap Singh
- Tue, 07 Jan 2025 12:26 PM (IST)
- Source:JND
Zomato Share Price: Zomato shares plunged up to 5% in the early trade on Tuesday after Global brokerage firm Jefferies downgraded its rating to a 'hold' call for the shares, citing concerns about the stock's sharp upside last year i.e. 2024 and rising competition in the quick-commerce space.
With Zomato's share price more than doubling in 2024, Jefferies analysts predict that 2025 could be a steady year for the food delivery and e-commerce giant's shares, with the stock price likely to shift gears into a consolidation phase. Jefferies also cut its price target on Zomato by 18 per cent to Rs 275 per share.
In the early trade, Zomato shares fell over 5 per cent to hit an intraday low at Rs 251.55 on the NSE. In the last 30 days, the stock has plunged over 14%. Meanwhile, its 52-week high and low values stood at Rs 304.70 and 121.60 respectively.
Also Read: Capital Infra Trust IPO Opens For Subscription Today; Know Latest GMP And Other Details
What did Jeffery say?
The global brokerage house said that while its valuation is not 'overly expensive' in the face of the stock's strong execution and opportunity, they are still concerned about rising competition in the fast-moving trading space. The brokerage warned that aggressive strategies of existing players and the entry of new competitors could lead to further discounting, posing risks to Zomato's medium-term profitability.
The brokerage wrote in its note that rising competition in the quick commerce space is a big concern for the companies to maintain profitability. Not only Zomato's Blinkit, Swiggy's Instamart, Zepto, Amazon, Big Basket, Flipkart and other players are also competing in the segment.
The Brokerage Firm Cuts Earning Estimates
Jefferies says aggressive moves by incumbents and the entry of new players are more likely to result in deeper discounts, which could result in threats to medium-term profitability.
As a result, Jefferies has sharply cut its forecast for Blinkit's earnings before interest, tax, depreciation and amortization (EBITDA) over FY2026 and FY2027 and halved its target multiple to 6x. For Zomato as a whole, Jefferies cut its EBITDA forecast by 12% for FY2026 and 15% for FY2025.
