Zomato Is Emkay Global's Idea Of Month — Here's Why

Zomato Ltd. is the idea of the month of Emkay Global Financial Services as the quick commerce platform will benefit from expected rebound in discretionary consumption in second half of calendar year 2025, and greater value capture by digital disruptors in consumer businesses.

Zomato's management spotted the opportunity in quick-commerce earlier, compared to peers, which is commendable, according to Emkay Global Financial Services. The company also has a proven track record of innovation and execution.

Quick-commerce is a bigger opportunity than modern retail or e-commerce because it is disrupting general trade. Existing two or three leaders should dominate after an initial period of intense competition, according to Emkay Global.

The low or falling profitability is not a factor to worry about. The inherent feature of internet businesses is that there is high losses in the initial phase, which leads to operating-leverage-led profitability as the business matures, the brokerage said.

Blinkit has an additional moat due to the complex quick-commerce fulfilment model, Emkay Global Financial Services said. Its topline growth and market share are the important metrics at this stage. The brokerage expects losses to continue for a few more quarters. "An upside surprise could be profit-positive interventions by Zepto ahead of its IPO, when it happens."

Zomato's 17% year-on-year growth in gross order value food delivery for third quarter in the ongoing financial year was underwhelming. However, it's a one-off from the excess seasonal pressures and general reduction in consumer spending. Discretionary consumption will recover in financial year 2026, the brokerage said.