Why is Zomato’s Share Price Falling?

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Zomato has seen a decline in stock performance since the last day, down 0.33%, and has been declining by approximately -5.05% over the past months. Currently trading below key moving averages, the company stands in contrast to the broader market, which is experiencing positive momentum. Zomato, a prominent player in the IT software sector, has experienced a notable 4.29% year-to-date decline, marking the second consecutive day of losses for the stock, which has dropped 5.15% over this period. In terms of performance metrics, Zomato has underperformed its sector, trailing by 6.25%. The stock is currently trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating a challenging market position. The Sensex has gained 0.13% over the last five days and declined by 49.1% in earnings, despite recent challenges. Zomato has shown a year-over-year increase. 

Key Reasons Behind the Zomato Share Price Fall

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There are several reasons behind the Zomato share price fall, including rising challenges in Quick Commerce, a Decline in Net Profit, a Decrease in Q3 Results, Mixed Performance of Zomato, and a slower growth outlook. 

• Rising challenges in Quick Commerce: Zomato saw impressive growth over the past year, with its share price doubling. However, the quick commerce segment, a critical part of Zomato’s operations through Blinkit, is becoming increasingly competitive. Industry experts note that the quick commerce market’s rapid expansion has led to intense competition, which can be the reason for Zomato’s share price fall. 
• Decline in Net Profit: One key reason for the Zomato share price decline was a change in Blinkit’s business model. The company moved from working only as a marketplace to also selling goods directly. The costs of goods purchased increased sharply, rising from ₹1,116 crore to ₹2,557 crore. 
• Decrease in Q3 Results: The food delivery platform’s consolidated net profit was ₹59 crore in Q3 FY25, a 57% reduction from ₹138 crore in the previous year. While, operational revenue increased by 64% year-on-year to ₹5,405 crores.   
• Mixed Performance of Zomato: Zomato’s share price has shown a mixed run in the stock market. While the company is a leader in food delivery in India, it is under pressure to maintain steady profits and manage logistics and restaurant tie-ups. The Zomato share price is falling due to mixed signals in its performance. 
• Slower Growth Outlook: Management indicated a slower-than-expected recovery in food delivery growth, citing weak consumer spending and weather issues, which leads to a reduction in the investor’s confidence.   

Zomato (Eternal): Future Outlook

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In the short term, the company expects pressure on profits. This is due to high costs and the ongoing work to expand and integrate new businesses. In the long term, the company sees growth potential in quick commerce, B2B supplies, and the events segment. These could support overall profits once they reach scale and improve their cost structure. Looking ahead, Zomato aims to strengthen its balance sheet through a planned fundraise, which will help it navigate market challenges and pursue strategic opportunities. This environment is forcing Zomato to balance between maintaining its market share and safeguarding its financial health. 

Zomato: Performance Analysis

In terms of performance metrics, Zomato has underperformed its sector, trailing by 5.25%. Low ability to service debt as the company has a high Debt to EBITDA ratio of -1.00 times. The company has reported losses. This company has reported a negative ROCE. PBT less OI (Q) at ₹-223.00 crore has fallen by -37.4% (vs previous 4Q average), PAT (Q) at ₹65.00 crore has fallen by -13.0% (vs previous 4Q average), and non-operating income is 272.87% of Profit Before Tax (PBT). The stock is trading at a risk premium relative to its average historical valuations, and over the past year, it has generated a return of 4.55%; its profits have fallen by 74.7%. The company’s revenue from operations in Q3FY25 stood at ₹5,405 crore, up by 64% over ₹3,288 crore in the corresponding quarter of the previous financial year. 

Note: For the live Zomato’s Share Price Target, visit the univest app and check the stock fundamentals.  

How have Zomato (Eternal) Shares Performed Recently? 

As of the recent close, the Zomato share price is ₹284.25, marginally above the previous close of ₹286.00. The stock’s intraday range has been relatively narrow, with a low of ₹287.85, suggesting limited volatility. When compared to its 52-week range, Zomato is trading closer to the lower end, with a high of ₹368.40 and low of ₹189.60, indicating a significant price band within which the stock has fluctuated over the past year. Examining Zomato’s returns relative to the Sensex provides further insight into its market performance. However, the longer-term perspective shows a different trend. Over three years, Zomato’s has delivered a return of 386.51%, significantly outpacing the Sensex’s 40.68% gain. 

Zomato: Share Price Target

The Zomato share price target is ₹420, and the consensus estimate represents an upside of 26.90% from the last price of ₹284.35. Based on 18 analysts, 25.00% of analysts recommend a ‘Buy’ rating for Zomato, with an average share price target of ₹380.10. According to Wall Street analysts, the average 1-year share price target for Zomato is ₹420.00 to ₹430.00, with a low forecast of ₹234.70 and a high forecast of ₹245.00.

Note: For the live Zomato’s Share Price Target, visit the univest app and check the stock fundamentals.  

Zomato: Analysts’ Rating

• The average 12-month price target is ₹450.00, and the consensus rating is Hold (mix of Buy, Hold, & Sell).
• The analyst’s target range is observed between a high of ₹450.00 and a low of ₹480. 
• According to some analysts, concerns remain about a ‘Reduce’ call at ₹470.78.
• The analyst’s sentiment is mixed; there have been recent bullish calls (ICICI, JM), but also cautious ones (Motilal Oswal, Nuvama). 

What is the Right Time to Buy Zomato Shares?

According to analysts, Zomato’ share price is determined by market factors. The share price has decreased due to internal company factors, as discussed above. Therefore, investors must review all relevant factors before investing in Zomato. There are some factors to consider before investing in Zomato Company shares.

• Strong Fundamentals: Investors should review Zomato Company’s fundamentals before investing. If a company has strong fundamentals, high profitability, and effective management, then investors should consider investing in it.    
• Financing Partnerships: Financing partnerships bridge the gap between customers and financial institutions, facilitating the distribution of a wide range of products and generating positive sales revenue for many consumers.   
• Growth in the Diversified Sector: The company is well-positioned in the diversified sector to deliver benefits to Zomato. This dominant sector increases demand and prices for Zomato.
• Highly Volatile: Prices are highly volatile, so price changes significantly impact Zomato Company’s stock price. Investors must review the market structure before investing in Zomato’s shares. 

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Conclusion

Zomato (Eternal) is a fascinating stock. It has become profitable (a significant milestone), operates in a high-growth category, has multiple engines of growth, and has a clean balance sheet. The Zomato share price target is ₹420, and the consensus estimate represents an upside of 26.90% from the last price of ₹284.35. Based on 18 analysts, 25.00% of analysts recommend a ‘Buy’ rating for Zomato, with an average share price target of ₹380.10. In terms of performance metrics, Zomato has underperformed its sector, trailing by 5.25%. Low ability to service debt as the company has a high Debt to EBITDA ratio of -1.00 times. The company has reported losses. This company has reported a negative ROCE. The Sensex has gained 0.13% over the last five days and declined by 49.1% in earnings, despite recent challenges. Zomato has shown a year-over-year increase. 

FAQs

What are the key reasons behind Zomato’s share price fall?

Ans. There are several reasons behind the Zomato share price fall, including rising challenges in Quick Commerce, a Decline in Net Profit, a Decrease in Q3 Results, Mixed Performance of Zomato, and a slower growth outlook. Zomato saw impressive growth over the past year, with its share price doubling. However, the quick commerce segment, a critical part of Zomato’s operations through Blinkit, is becoming increasingly competitive.

What is the Zomato share price target?

Ans. The Zomato share price target is ₹420, and the consensus estimate represents an upside of 26.90% from the last price of ₹284.35. Based on 18 analysts, 25.00% of analysts recommend a ‘Buy’ rating for Zomato, with an average share price target of ₹380.10. According to Wall Street analysts, the average 1-year share price target for Zomato is ₹420.00 to ₹430.00, with a low forecast of ₹234.70 and a high forecast of ₹245.00.

What are the key factors that affect the Zomato share price?

Ans. According to analysts, Zomato’s share price is determined by market factors. The share price has decreased due to internal company factors, as discussed above. Therefore, investors must review all relevant factors before investing in Zomato. There are some factors to consider before investing in Zomato Company shares. Investors should review Zomato Company’s fundamentals before investing. If a company has strong fundamentals, high profitability, and effective management, then investors should consider investing in it.  

Should investors buy Zomato’s shares or not?

Ans. As of the recent close, the Zomato share price is ₹284.25, marginally above the previous close of ₹286.00. The stock’s intraday range has been relatively narrow, with a low of ₹287.85, suggesting limited volatility. When compared to its 52-week range, Zomato is trading closer to the lower end, with a high of ₹368.40 and a low of ₹189.60. In the short term, the company expects pressure on profits. This is due to high costs and the ongoing work to expand and integrate new businesses. 

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