Zomato, India’s leading food delivery platform, has been facing a divergence in analyst opinions. While Morgan Stanley remains bullish, maintaining its “Overweight” rating and a target price of 355, Jefferies has taken a more cautious stance, downgrading the stock to “Hold” and reducing its target price to 275 from 335.
Despite this positive outlook, shares of Zomato Ltd tumbled 4.44 per cent to ₹252.90 on the BSE at 11 AM on Tuesday.
Jefferies expressed concerns about the intensifying competition in the quick commerce sector, citing aggressive moves by existing players and the entry of new entrants. The firm believes this increased competition could force Zomato to increase discounting, potentially impacting profitability in the medium term.
Consequently, Jefferies has lowered its earnings projections for Zomato’s quick commerce arm, BlinkIt, and trimmed its overall earnings estimates.
In contrast, Morgan Stanley remains optimistic about Zomato’s prospects. The firm highlighted the company’s continued focus on profitability and its consistent growth in monthly active users, a key indicator of future order volume and revenue.
The stock hit a 52-week high of ₹304.50 on December 5, 2024, reaching a low of ₹121.70 on January 18, 2024 on the BSE.
SHARE
Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppReddit
Published on January 7, 2025
https://www.thehindubusinessline.com/markets/stock-markets/morgan-stanley-bullish-on-zomato-jefferies-downgrades-amid-market-concerns/article69071195.ece
