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Shares of Zomato traded with a loss of more than 5% on Friday after foreign brokerage Macquarie predicted the food delivery platform's share price would fall nearly 50% over the next 12 months due to increased competition in the quick-commerce sector. It is becoming.
The brokerage reiterated its “underperform” stance on Zomato and assigned a price target of Rs 96 for the stock, implying a possible 46% decline from Thursday's close.
The brokerage has maintained an “underperform” rating on Zomato since May last year after downgrading it from its previous rating of “neutral”.
Macquarie is one of three analysts with a “sell” or equivalent rating on Zomato.
Macquarie wrote in a note that competition is increasing with JioMart starting next month to deliver groceries within 30 minutes. JioMart plans to initially offer these services in eight cities and then expand to the top 20-30 cities across the country during the first phase.
Additionally, brokerages continue to see downward trend in consensus forecasts and margins for Zomato's fast commerce business “Blinkit”.
This view runs counter to a view shared by Goldman Sachs early last month, which valued Blinkit at a higher multiple compared to Zomato's core food delivery business.
In the March quarter, Blinkit swung to positive EBIT and revenue more than doubled year-on-year to Rs 769 crore.
Zomato's net profit for the March quarter was Rs 175 crore, compared to a net loss of ₹188 crore in the same quarter last year. The 37% jump also helped the profit figure of the company's other income, which stood at Rs 235 crore.
Zomato is up over 150% in the last 12 months.