Share price of Zomato Ltd. dropped nearly 5% in early trade on Tuesday following a downgrade by Jefferies, which reduced its rating on the food delivery company to 'hold' due to increasing competitive pressures.
Jefferies analysts projected that Zomato's stock would experience a year of consolidation after a strong 2024, in which it had doubled in value, in a note on Jan. 6. While the analysts acknowledge Zomato's solid execution and growth potential, they expressed concerns about rising competition in the quick commerce sector.
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The brokerage revised its target price for Zomato shares to Rs 275, down from Rs 335, indicating just a 1% upside from the stock's previous closing price.
It anticipates that intensified competition from both established players and new entrants will result in greater discounting, potentially impacting Zomato's medium-term profitability.
Additionally, Jefferies significantly lowered its Ebitda forecast for Blinkit, Zomato's quick-commerce division, for fiscals 2026-27 and reduced its target multiple for Blinkit to six times.
Zomato Share Price Today
Zomato share price fell as much as 4.95%, the lowest level since Nov. 11, 2024, before paring some loss to trade 4.74% lower at Rs 252.30 apiece, as of 10:06 a.m. This compares to a 0.18% advance in the NSE Nifty 50.
The scrip has risen 119.45% in the last 12 months. Total traded volume so far in the day stood at 2.5 times its 30-day average. The relative strength index was at 34.5.
Out of 27 analysts tracking the company, 24 maintain a 'buy' rating, one recommends a 'hold' and two suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 20%.
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