Zomato shares fell by 11.43% on the BSE, reaching a low of ₹212.25 on Tuesday, January 21, following the company’s report of a 57% drop in its consolidated net profit for the December quarter, which amounted to ₹59 crore compared to ₹138 crore during the same period last year.
In Q3FY25, Zomato’s revenue from operations rose to ₹5,405 crore, reflecting a 64% increase from ₹3,288 crore in the same quarter last year. Sequentially, the profit after tax (PAT) decreased by 66% from ₹176 crore reported in Q2FY25, although the topline grew by 13% compared to ₹4,799 crore in the previous quarter.
The gross order value (GOV) for Zomato’s B2C businesses increased by 57% year-on-year and by 14% quarter-on-quarter, reaching ₹20,206 crore in Q3FY25. In a letter to shareholders, Zomato acknowledged a significant slowdown in demand that began in mid-November.
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Analysts have weighed in on whether to buy, sell, or hold zomato’s stock:
UBS has maintained a ‘Buy’ rating for Zomato with a target price of ₹320. They noted that while there was an unexpected slowdown in food delivery, positive margin growth offset this concern. Additionally, Zomato is accelerating its rollout of dark stores and now aims for 2,000 locations by December 2025.
Nomura also holds a ‘Buy’ rating but has adjusted its target price down to ₹290 from ₹320. They pointed out lower short-term profitability in the Quick Commerce segment but highlighted surprising profitability despite the food delivery slowdown. Nomura praised Zomato’s strong execution and solid balance sheet.
Conversely, Macquarie has given Zomato an ‘Underperform’ rating with a target price of ₹130. They expressed concerns about competitive pressures affecting profitability and predicted Blinkit would face ongoing negative margins. Macquarie sees limited safety margins for the company and anticipates a slight decline in food delivery.
BofA reiterated a ‘Buy’ rating with a target price of ₹375. They noted that Zomato’s Q3 results fell short of consensus expectations for EBITDA and EPS. Blinkit reported an adjusted EBITDA loss of ₹103 crore due to rapid expansion, with losses expected to continue for one to two more quarters. Despite this, BofA anticipates over 100% growth in GOV for FY25 and FY26.
While Zomato’s revenue showed significant growth, its profit decline has raised questions among analysts about its future performance and investment strategies.
