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Zomato Faces Sharp Decline In Net Profit: What Should Investors Know?

Zomato’s Q3 FY25 net profit fell 57% to ₹59 crore, leading to a 10% drop in share price. Despite muted growth, analysts remain optimistic about Blinkit's expansion and long-term profitability.

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Zomato Faces Sharp Decline In Net Profit: What Should Investors Know?


Zomato’s share price fell by nearly 10% in early trade on Tuesday, following a significant 57.25% decline in net profit for the third quarter of FY25. At 01:15 pm, the stock was trading at ₹218.65, marking a sharp drop from the previous session.

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The company reported a net profit of ₹59 crore in Q3 FY25, a steep decrease from ₹138 crore during the same period last year. Despite this setback, Zomato’s revenue from operations rose to ₹5,405 crore, reflecting muted overall growth for the quarter.

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Brokerage Firms Remain Optimistic Amid Challenges

Despite the dip in Zomato’s stock, many brokerages maintain a positive outlook on its future. Nomura acknowledged the challenges faced by Zomato but highlighted Blinkit’s potential to secure a top-two position in the competitive quick-commerce market.

Jefferies also expressed confidence in Blinkit, noting the company’s ambitious plan to double its store count to 2,000 by December 2025. While Jefferies reduced its target price to ₹255, it retained a ‘HOLD’ rating.

Bernstein reiterated its ‘OUTPERFORM’ rating on Zomato, setting a target price of ₹310. The firm attributed the stock’s recent correction to increased competition in the quick-commerce sector.

Mixed Ratings from Other Brokerages

An Institutional Equities emphasized that Blinkit’s rapid dark store expansion has led to faster growth but noted short-term profitability concerns due to upfront costs. Expert stated reduced its target price to ₹300 but maintained a ‘BUY’ call.

Meanwhile, CLSA set a higher target price of ₹400, with BofA Securities and Nomura India projecting target prices of ₹375 and ₹290, respectively.

Blinkit: A Beacon of Hope

Blinkit, Zomato’s quick-commerce division, continues to attract attention for its robust growth potential. Analysts believe the ongoing expansion of Blinkit’s dark store network could strengthen Zomato’s position in the long term, despite the current profitability challenges.

Investor Takeaway

While Zomato’s sharp profit decline has sparked immediate market concerns, the long-term optimism surrounding Blinkit and its aggressive expansion strategy offers hope for recovery. Investors are advised to keep an eye on the company’s strategic moves as it navigates the competitive quick-commerce landscape.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts in this article are their own and do not necessarily reflect the views of NewsX. Readers are advised to consult a qualified financial advisor or broker before making any investment or trading decisions.)

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