Food delivery giant Zomato's share price fell nearly 10% in early trade on Tuesday after reporting a sharp decline in net profit during the third quarter of FY25.
Zomato shares were trading 9.42% lower at Rs 218.25 at 10:22 am. Shares of the food delivery giant had also declined in the previous session.
The company's net profit in Q3 FY25 declined to Rs 59 crore from Rs 138 crore in the same period a year ago. This marked a staggering 57.25% drop in net profit.
While revenue from operations rose to Rs 5,405 crore, the overall growth was muted in the third quarter.
Despite today's sharp decline in Zomato's share price, most brokerages remain optimistic about the company's future performance.
For instance, brokerage firm Nomura noted that Zomato faces a more challenging landscape but added that its quick-commerce division, Blinkit, is poised to secure a top-two spot in the immensely popular market.
Jefferies, too, remains optimistic about Blinkit's performance and is confident about the management's goal to double Blinkit's store count by 2,000 by December 2025.
Despite this, the brokerage cut its target price on the stock to Rs 255, albeit retaining a 'HOLD' rating on the stock.
Brokerage firm Bernstein retained an 'OUTPERFORM' rating on the Zomato stock, with a target price of Rs 310. It also highlighted that the recent correction in the stocks was due to rising competition in the quick commerce space.
Nuvama Institutional Equities also stated that Blinkit's dark store additions are outpacing expectations, leading to faster growth.
"We believe this bunching up of cost for dark store addition shall hurt profitability in the short-term, but shall ultimately lead to bunching up of profitability in future quarters as these stores mature," Nuvama said.
Nuvama has cut its target price on the stock to Rs 300, but it has retained its 'BUY' call.
Among other brokerages, CLSA has a target price of Rs 400 on Zomato stock, while BofA Securities has kept it at Rs 375 and Nomura India has set it at Rs 290.
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