Zomato Share Price: Why This LargeCap Stock Nosedived By 13% After Q3, & Should You Buy?

The largest food delivery online company, Zomato Ltd share price witnessed massive selling pressure on Tuesday, January 21, after it reported mixed performance in Q3 of FY25. Zomato, which joined the large-cap basket in 2024, and outperformed giants like Tata Motors and Bajaj Auto in January month, has nosedived by at least 13% on Tuesday. Despite the latest fall, brokerages are optimistic about Zomato for long-term growth and hence recommended BUY.

Zomato Share Price:

At the time of writing, Zomato shares traded at Rs 218.65 apiece, down by 9.3% on BSE with a market cap of Rs 2,10,715.41 crore. The m-cap of Zomato declined by Rs 29,763.22 crore on Tuesday and reached its lowest around Rs 2.02 lakh crore. Overall, the stock dipped by 12.8% to hit an intraday low of Rs 210.15 apiece.

The stock's 52-week high and low are at Rs 304.50 apiece and Rs 128.10 apiece respectively.

Zomato Q3 Results:

Zomato reported a consolidated net profit of Rs 59 crore in Q3FY25, more than half from its PAT of Rs 138 crore in Q3FY24, while the profit was also significantly down from Rs 176 crore reported in Q2FY25.

On the profitability, Akshant Goyal, CFO of Zomato said, "On the profitability front, consolidated Adjusted EBITDA grew 128% YoY to INR 285 crore in Q3FY25, largely driven by improvement in food delivery Adjusted EBITDA margin (as a % of GOV) to 4.3% compared to 3.0% a year ago. However, on a QoQ basis, consolidated Adjusted EBITDA declined by 14% (or INR 45 crore) despite the improvement in food delivery margins, largely due to accelerated investments in expanding our quick commerce store network, where quarterly losses increased by INR 95 crore QoQ."

Akshant also said " As we continue to bring forward store expansion, our networks may have to carry a greater load of under-utilized stores which will impact near-term profits in the next one or two quarters. These investments will however also likely result in GOV growth remaining meaningfully above 100%, at least for FY25 and FY26," adding, "Once we come out from this period of expansion, the business is likely to turn sharply from being loss-making to becoming meaningfully profitable as a larger part of our business starts comprising mature stores compared to newly added ones. "

On the other hand, consolidated revenue from operations stood at Rs 5,405 crore in Q3FY25, witnessing strong growth from revenue of Rs 3,288 crore in Q3FY24 and Rs 4,799 crore in Q2FY25.

Among key takeaways from the quarter are --- Blinkit store crossed the 1,000 mark, one quarter ahead of its plan. Zomato announced that it aims to get 2,000 stores by December 2025, one year ahead of earlier guidance of December 2026. The company launched the all-new District and Bistro mobile apps in Q3.

Looking ahead, Rahul Gupta - Zonal Head - of Zomato said, "Growth from here on will be driven by two things - growth in the underlying categories and increase in our market share. We believe that strong execution can significantly alter the growth trajectory of the underlying categories here, given the latent demand and unaddressed opportunity. If we execute well, we don't see why this business cannot grow at 40%+ YoY at least for the next couple of years."

Should You Buy Zomato Shares?

Motilal Oswal in its note said, "We note near-term challenges to profitability from QC expansion; however, we believe Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery and e-commerce. Overall, Zomato is well-positioned to capitalize on this growth by expanding its customer base, increasing the order volumes and values, and improving its unit economics and profitability over the long term."

On the valuation, Motilal added, Zomato's food delivery business is stable, and Blinkit offers a generational opportunity to participate in the disruption of industries such as retail, grocery and e-commerce.

It added, "We have reduced our estimates for FY25E/26E/27E by ~30%, driven by the accelerated expansion of the dark store network and uncertainty arising from intense competition. This expansion has led to reduced profitability due to higher capital expenditures and increased investments. Zomato should report a PAT margin of 3.5%/6.8%/9.9% in FY25E/FY26E/FY27E. Our DCF-based valuation of INR270 suggests a 13% upside from the current price. We reiterate our BUY rating on the stock."

Further, Emkay Global said, that Zomato's management expects the losses in Blinkit to continue in the near term, due to aggressive store expansion; it now targets reaching a store-count of 2,000 by Dec-25 (vs Dec-26 earlier), but the pause in margin expansion is expected to be temporary. Going Out also reported a loss, due to investments in the new District app.

However, Emkay's note added, "We cut FY25-27E EPS by 46-83%, building in the Q3 performance, lower Blinkit margin, and expansion plans. We retain BUY and Dec-26E DCF-based TP of Rs310."

Moreover, JM Financial said, that in Dec-Q, not only did Blinkit exceed 1,000 stores count, a qtr earlier than guided, but also stepped-up plans to reach the 2,000 stores target by Dec'25, ahead of earlier guidance of Dec'26. While this strategy could aggravate Blinkit's absolute losses as well as capex in the near term, it should help it sustain GOV growth of >100% YoY in FY25 and FY26, and thus maintain market leadership. We postulate Blinkit could also see a sharp improvement in its profitability once store expansion slows down in 2HFY26. On the other hand, food delivery (FD) GOV growth in 3Q moderated to 17% YoY (+2% QoQ), the slowest in the past six qtrs due to macro challenges.

"Adj. EBITDA margin expansion to 4.3% (as % of GOV) was robust at 75bps QoQ (JMFe of c.50bps) due to the benefits of platform fee increase and cost efficiencies. While near-term uncertainties in Blinkit's profitability trend may lead to pressures in the stock, we strongly suggest long-term investors use the opportunity to build sizable positions," JM added.

Hence, JM suggested BUY on Zomato for the Rs 280 target.