Zomato Faces A 44% Stock Freefall Warning Amid Rising Competition And Margin Woes!
Macquarie’s bold prediction shakes investor confidence as Zomato battles intense quick-commerce competition and mounting costs.

A famous quick-commerce and food delivery behemoth, Zomato is under attack due to brokerage firm Macquarie Capital Securities estimating a freefall of nearly 44% for its stock value. Analysis done by Macquarie claims the share value for Zomato could slump almost 44% from the existing levels and settle at around ₹130. This prediction comes amidst rising competition in the quick-commerce sector, higher expenses, and below-par financial performance in the December quarter.
Zomato Share Price Today, January 22
As of January 22, 2025, Zomato’s share price had declined approximately 5%, trading at ₹203.85. This has brought the stock to a more than 17% fall in five trading sessions and reflects a growing concern on investors’ sides. The decline is much marked compared to Nifty 50, as that index declined just 1% in the same period.
Macquarie’s ‘Underperform’ Rating
Macquarie Capital Securities has maintained its ‘Underperform’ rating for Zomato, setting a price target of ₹130 per share. This implies a potential downside of 44% from the current market price. Macquarie’s cautious stance is rooted in the following key factors:

- Increased Competition in Quick-Commerce: Ultra-fast delivery services have also boosted competition into the cutthroat range because Instamart and Blinkit, by Swiggy, have joined the bandwagon. Zomato has strategically invested in Blinkit; according to analysts at Macquarie, such competitive scenarios pose enormous risks to sustaining margin expansion and growth.
- High Expenses and Margins at Risk: Zomato’s December quarter results saw the company increasing investments in marketing and employees. These investments show good benefits on gross order value (GOV) and user additions, but the company has strained operating margins. For the quick-commerce segment, the adjusted operating margins fell to -1.3% of GOV, below estimates of near-breakeven.
- Blinkit’s Financial Impact: Blinkit, Zomato’s quick-commerce subsidiary, reported a 120% year-on-year gross order value jump in the December quarter. However, this growth came at the cost of heavy marketing spending. Macquarie’s estimates for Blinkit include a 3.25x increase in GOV over the next three years alongside an EBITDA margin expansion to 3.5%. The brokerage, however, highlighted risks of prolonged negative margins due to hyper-competition.
Financial Performance: A Mixed Bag
- December Quarter Earnings
Zomato’s net profit for the December quarter fell by 57% year-on-year to ₹59 crore, compared to ₹138 crore in the same period last year. While the company’s revenue from operations grew by 64% year-on-year to ₹5,404 crore, this was primarily offset by higher marketing and operational expenses.
- Blinkit’s Operational Expansion
Blinkit added 216 dark stores during the December quarter, taking its total store count to 1,007. Management has set a very aggressive goal of reaching 2,000 stores by December 2025. This growth has been a good indicator of Zomato’s commitment to scaling quick-commerce operations. However, from a profitability perspective, cost implications have been a concern.
- Historical Context: Macquarie’s Ratings
Macquarie saw a rollercoaster ride for Zomato’s stock, which it holds. With the changing market conditions, the brokerage had to change its June 2022 “Underperform” rating to “Outperform”. Still, Macquarie has essentially cut its target price down over the years, this time based on increasing competition and structural issues in the quick-commerce business. Despite these ratings, company’s share price has consistently outperformed Macquarie’s targets over the past year.
Zomato Vs Nifty 50: A Performance Comparison
- Zomato’s Stock Performance
- Zomato’s share price has declined by over 17% in the past five trading sessions.
- It has fallen nearly 24% in the past month and 5.6% in the past six months.
- Despite recent declines, the stock has delivered a 61% return over the past year, showcasing its long-term growth potential.
- Nifty 50 Index Performance
- The Nifty 50 has seen a modest decline of 1% over the past five trading sessions.
- Over the past month, the index has fallen by 2.7%, and over the past six months, it has declined by 5.7%.
- The index is up 8.8% in the past year, with better market resilience than Zomato volatility.
Challenges Ahead for Zomato
- Profitability Concerns: The quick-commerce business is a thin-margin business, so profitability remains a significant challenge. Although those investments in Blinkit and other initiatives have been growth drivers, they also have added to the financial strain.
- Regulatory and Market Risks: Regulatory issues of data privacy, delivery standards and competition laws govern Zomato. Moreover, market volatility impacts investor sentiment or stock performance as well.
- Sustaining Growth Amid Competition: The sustainability of the growth momentum while facing competitive pressure, the capability to innovate, the optimization of business operations, and the loyalty of consumers will be critical for company’s long-term success.
The Road Ahead
- Macquarie’s Projections: Macquarie does anticipate Blinkit’s GOV to grow meaningfully over the next three years but remains exposed to downward margin pressure due to competition. The analysis of the brokers is what Zomato requires to reconcile growth investments with financial discipline.
- Strategic Focus Areas: To address these challenges, Zomato may consider:
- Enhancing operational efficiency to improve margins.
- Diversifying revenue streams to reduce dependence on the quick-commerce segment.
- Growth will be driven mainly by further building on its core food delivery business.
- Investor Outlook: Even though the growth recently tapered off, long-term prospects are still highly positive for Zomato. It has remained firmly established as a market leader in food delivery and is only now investing very slowly in quick commerce. Regarding restoring investor confidence, profitability and sustainability are significant considerations.
Conclusion
Share price had been battered in the last few weeks as these reflect the broader headwinds that characterize the quick-commerce and food delivery space. This bearish call from Macquarie flags a list of risks attributable to increased competition and hence high cost, bringing about profitability pressure. Zomato has gone through tough times lately and has been resilient over time, but it is not what the company will do next.

While opportunities abound in the stock of Zomato, risks do not lag far behind. While its long-term growth story remains in place, there are enough factors in short-term volatility and margin pressures to stay cautious. While Zomato continues to scale up operations and fine-tune its strategy, all eyes will be on delivering value to shareholders in a progressively competitive market.