Jefferies Lowers Zomato's Target Price Amid Quick Commerce Competition Concerns
7th Jan 2025
Jefferies Downgrades Zomato, Cites Competition Concerns
According to the report, foreign brokerage Jefferies has downgraded Zomato Ltd to 'Hold' from 'Buy' and suggested a target price of Rs 275 on the stock, down from Rs 335 earlier. Jefferies noted that the competition in quick commerce has increased, raising concerns over profitability, and it sees a year of consolidation for the online food aggregator's stock.
Blinkit and Instamart Expand Presence, Aim for Wider Reach
Blinkit, Zomato's quick commerce arm, has scaled its presence to 45-50 cities in two years, with a store count of 791 in Q2FY25. The target is to reach 1,000-plus stores by the end of FY25 and 2,000 by the end of 2026. Swiggy's Instamart, on the other hand, currently has a presence in ~54 cities and aims to be present in 75 cities, with a target of reaching 1,000 dark stores by the end of FY25.
Analysts Divided on Quick Commerce Space, Zomato and Swiggy Outlooks
While Elara Securities believes Blinkit will maintain its industry-leading position, Anand Rathi believes multiple players can co-exist in the quick commerce space. Anand Rathi has initiated coverage on Zomato and Swiggy with 'Buy' ratings, stating that the duopoly in food delivery is well-entrenched and cannot be easily shaken. However, the brokerage sees Swiggy as a strong contender, with its relentless expansion plans in quick commerce and other new initiatives.
According to the report, foreign brokerage Jefferies has downgraded Zomato Ltd to 'Hold' from 'Buy' and suggested a target price of Rs 275 on the stock, down from Rs 335 earlier. Jefferies noted that the competition in quick commerce has increased, raising concerns over profitability, and it sees a year of consolidation for the online food aggregator's stock.
Blinkit and Instamart Expand Presence, Aim for Wider Reach
Blinkit, Zomato's quick commerce arm, has scaled its presence to 45-50 cities in two years, with a store count of 791 in Q2FY25. The target is to reach 1,000-plus stores by the end of FY25 and 2,000 by the end of 2026. Swiggy's Instamart, on the other hand, currently has a presence in ~54 cities and aims to be present in 75 cities, with a target of reaching 1,000 dark stores by the end of FY25.
Analysts Divided on Quick Commerce Space, Zomato and Swiggy Outlooks
While Elara Securities believes Blinkit will maintain its industry-leading position, Anand Rathi believes multiple players can co-exist in the quick commerce space. Anand Rathi has initiated coverage on Zomato and Swiggy with 'Buy' ratings, stating that the duopoly in food delivery is well-entrenched and cannot be easily shaken. However, the brokerage sees Swiggy as a strong contender, with its relentless expansion plans in quick commerce and other new initiatives.