Zomato Shares Drop As Losses Swell, But Most Analysts Maintain 'Buy' Rating 

Zomato's third-quarter net loss widened to Rs 346.6 crore from a loss of Rs 250.8 crore in the previous quarter.

<div class="paragraphs"><p>A Zomato delivery partner in Mumbai. (Photo: Francis Mascarenhas/Reuters)</p></div>
A Zomato delivery partner in Mumbai. (Photo: Francis Mascarenhas/Reuters)

Shares of Zomato Ltd. declined the most since Jan. 25 after the company reported widening losses sequentially as Blinkit continued to bleed.

However, its core offering of food delivery neared adjusted Ebitda profitability, the company said.

The Gurugram-based restaurant aggregator's third-quarter net loss widened to Rs 346.6 crore from a loss of Rs 250.8 crore in the previous quarter. That compares to the Rs 321.21 crore estimated by a consensus of analysts tracked by Bloomberg.

 Key Highlights (Consolidated, QoQ)

  • Revenue rises 17.2% to Rs 1,948.2 crore, compared to an estimate of Rs 1,785.8 crore.

  • Ebitda loss at Rs 366.2 crore versus Rs 418 crore, as against a forecast of Rs 352.95 crore.

Zomato Q3 Results: Loss Widens, Food Delivery Business Nears Operational Break-Even

Shares of the company fell 7.4% to Rs 50.35 apiece during early trade on Friday.

Of the 25 analysts tracking the company, 18 maintain 'buy', four suggest 'hold', and three recommend 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 46.1%.

Here's what brokerages made of Zomato's Q3 performance:


  • Has a 'buy' rating with a target price of Rs 100, implying a potential upside of 84%.

  • Zomato continues to show an urgency to reduce loss with adjusted Ebitda (ex-Blinkit) now.

  • Food gross order value stayed near flat QoQ which management attributed to tough macro. Outlook seems positive as break-even target stays, as early as Q4FY23 - another positive in the context of Zomato Gold.

  • Green-shoots in food delivery are also visible on demand in Jan. Blinkit also sees strong growth with swift reduction in losses.

  • Jefferies expects unit economics to steadily improve with scale as Zomato unlocks cost efficiencies and as customer willingness to pay for convenience increases.


  • Maintains 'reduce' rating with a target price of Rs 50, implying a potential downside of 7.4%.

  • Most of the improvement in food delivery seems to have come from cost optimisation.

  • Maintaining both high gross order value growth and high contribution margin together is going to be challenging for Zomato in India.

  • Q3 food delivery gross order value sequential growth slowdown to 0.7% in a seasonally strong quarter is very sharp, in our view.

  • Growth revival through relaunching the Gold loyalty program is likely to delay a continued recovery in contribution margin.

Morgan Stanley

  • Maintains 'overweight' rating with a target price of Rs 82, implying a potential upside of 51%.

  • Unit economics in core business (ex-Blinkit) surprised positively and management confident on its break even target; quick commerce showing good traction.

  • Adjusted revenue was 3.6% higher than estimates led primarily by stronger-than-expected Hyperpure and others (included some non-recurring items).

JM Financial

  • Maintains 'buy' rating.

  • Zomato once again surprised positively on the profitability front in 3Q.

  • Both monthly transacting users as well as ordering frequency were weak QoQ.

  • Balance sheet remained robust with around Rs 11,300 crore in cash.