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Shares of quick-commerce companies Swiggy and Zomato continued to slide, dropping an additional 3%
Zomato Share Price
Shares of quick-commerce companies Swiggy and Zomato continued to slide, dropping an additional 3% on January 22, amid growing concerns about escalating competition in the sector. These worries gained traction following Zomato’s sharp profit decline in Q3, which stemmed from the company’s aggressive dark store expansion strategy for its quick commerce business, Blinkit.
Over the past three sessions, Zomato’s shares have plummeted by 17%, while Swiggy’s stock has fallen 11% in just two days.
As of today’s session, Swiggy shares hit an intraday low of Rs 424.65, and Zomato shares slipped to Rs 203.85.
Zomato Stock Down 33% From Lifetime High
At this level, Zomato’s stock has corrected 33.07% from its all-time high of Rs 304.50, reached on December 5, 2024.
The decline began after Zomato reported a 57.24% YoY drop in consolidated net profit for Q3 FY25, falling from Rs 138 crore in the same period last year to Rs 59 crore. However, revenue from operations surged by 64.39%, reaching Rs 5,405 crore in Q3 FY25, up from Rs 3,288 crore in the year-ago quarter.
Zomato also highlighted a 128% YoY increase in adjusted EBITDA, though on a quarter-on-quarter (QoQ) basis, it fell 14% due to investments in expanding new stores and acquiring customers for its quick commerce business.
Analysts are divided in their views on the stock. One suggested that investors start buying at levels around Rs 210-200, adding more on dips, while another analyst recommended holding the stock only for those with a high-risk tolerance.
“Zomato is a long-term play, but the company needs to improve its revenue metrics. The market may remain cautious in the short to medium term. Investors with a high-risk appetite may consider holding on,” said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.
Brokerage firms such as Nomura, Jefferies, and Bernstein are all optimistic about Zomato’s long-term growth potential. However, most of the brokerages said the near-term losses may be higher due to the rapid expansion of dark stores.
It is also worth noting that brokerages such as Nuvama Institutional Equities and Jefferies have trimmed their target price on Zomato’s stock.
Technical Outlook
On the technical front, Zomato’s stock is trading below key moving averages, including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day simple moving averages (SMAs). Its 14-day relative strength index (RSI) stands at 28.22, indicating that the stock is oversold (below 30 is considered oversold).
Zomato’s price-to-earnings (P/E) ratio is 114.24, compared to a price-to-book (P/B) ratio of 7.73. The company’s earnings per share (EPS) is 1.85, and its return on equity (RoE) stands at 7.38%.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
