Zomato Q2 Mixed Bag For Analysts, Blinkit Break-Even Key Positive

While Zomato Ltd.'s profitability concerns weigh on analysts, the company's rapid growth, driven by Blinkit, remains a positive point. Citi Research even noted that dark stores operated by the quick commerce platform are nearing break-even in the first full quarter post-launch itself.

The food delivery majors second-quarter profit miss has led to mixed reactions from brokerages, with the company reporting a 30% drop in net profit to Rs 176 crore, compared to Rs 253 crore in the previous quarter.

Many brokerages are revising their target prices upward, but concerns over margin pressures and competition persist. This caution reflected in Zomato share price in early trade, which were down as much as 5.56% at Rs 242.10 as compared to a 0.02% decline in the benchmark Nifty 50.

Citi Research retained its 'buy' rating, raising the target price to Rs 310, with a 21% upside. The brokerage noted that Zomato is unlikely to face significant margin pressures in the short term despite Blinkit's rapid expansion. It praised the company's growing traction in quick commerce space, noting that customer overlap between food delivery and Blinkit has decreased as the latter appeals to a broader user base.

The brokerage also said that Blinkit added around 152 dark stores during the September quarter, keeping it on track to meet its growth targets. New dark stores are now reaching contribution break-even in the first full quarter after launch at roughly 1,100 orders per day or daily gross order value of Rs 7 lakh.

However, it also flagged potential risks such as high cash burn in quick commerce and regulatory challenges surrounding delivery-partner remuneration.

Nuvama Institutional Equities echoed the optimism, increasing its target price to Rs 325 from Rs 285, citing faster-than-expected Blinkit dark store additions. However, the brokerage cautioned that this aggressive expansion would delay profitability due to upfront costs, trimming Ebitda estimates for fiscals 2025 to 2027 by 16.6%, 15.3%, and 4.7%, respectively.

Still, the brokerage maintained its positive outlook on Zomato's strategy in the competitive quick commerce space.

Emkay also maintained its ‘buy' rating with a target price of Rs 310, though it revised down its fiscal year 2025-27 earnings per share estimates by 17–26%. The brokerage expressed disappointment over Zomato's profit miss and Blinkit's flat profitability, even though it highlighted strong growth across business segments. Emkay remains positive on the company's long-term potential but warned of margin pressures, especially in Blinkit's operations.

Motilal Oswal reiterated its 'buy' rating, upgrading its target price to Rs 330, 29% higher than previous close. The brokerage underscored that Blinkit's "dark store model" is proving viable, with mature dark stores already showing positive contribution margins.

The brokerage expects Zomato to achieve PAT margins of 4.7%, 8.6%, and 12.9% in financial year 2025, 2026, and 2027, respectively, noted the company's long-term profitability prospects.

Macquarie, however, remains bearish with an ‘underperform' rating and a significantly lower target price of Rs 100, reflecting a 61% downside. It acknowledged Blinkit's strong growth and margin stability but highlighted underperformance in Zomato's core food delivery business. 

It also raised concerns over the quick commerce segment's unit economics and increasing competition in the coming years, which could impact profitability further. It also expressed skepticism over the company's cash burn and recent qualified institutional placement, seeing limited margin of safety for investors.