Shares of Zomato are trading with losses of over 5 per cent on Friday after foreign brokerage Macquarie forecast nearly 50 per cent decline in the food delivery platform’s share price in the next 12 months owing to increased competition in the quick commerce sector.
The brokerage reiterated its “underperform” stance on Zomato, assigning its stock a price target of Rs 96, implying a potential downside of 46 per cent from Thursday’s close.
The brokerage has had an “underperform” rating on Zomato since May last year, after it downgraded it from its earlier rating of “neutral.”
Macquarie is one among the three analysts that have a “sell” or equivalent rating on Zomato.
Macquarie wrote in its note that the competitive intensity is on the rise as JioMart will start delivering groceries in 30 minutes from next month. JioMart plans to initially provide these services in eight cities and then expand to the top 20-30 cities in the country during the first phase.
The brokerage also continues to see downside to consensus forecasts and margins for Zomato’s quick commerce business “Blinkit.”
This view is contrary to the one shared by Goldman Sachs earlier last month, where it valued Blinkit at a higher multiple compared to Zomato’s core food delivery business.
For the March quarter, Blinkit turned EBIT positive, while its revenue more-than-doubled on a year-on-year basis to Rs 769 crore.
Zomato’s net profit for the March quarter stood at Rs 175 crore, compared to a net loss of ₹188 crore during the same quarter last year. A 37 per cent jump also aided the profit figure in the company’s other income, which came in at Rs 235 crore.
Zomato has risen over 150 per cent in the last 12 months.
