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The brokerage firm Macquarie has issued a report predicting a significant decline in the share price of popular food delivery company Zomato over the next 12 months. According to their analysis, Zomato's stock could potentially fall by nearly half, marking a substantial drop from its current valuation.
Macquarie's bearish outlook stems from the intensifying competition in the quick commerce space, particularly with the impending entry of JioMart into the market. JioMart's plans to offer 30-minute grocery delivery services in major cities pose a direct threat to Zomato's core business.
The brokerage also expressed concerns about the profitability of Zomato's quick commerce arm, Blinkit, despite its recent financial improvements. Macquarie believes that consensus forecasts for Blinkit's growth and margins may be overly optimistic, and that the company faces challenges in achieving sustainable profitability in the face of increasing competition.
Zomato's share price has already reacted to the news, with a significant drop of over 3% on Friday. This decline reflects the market's担忧 about the company's future prospects and the potential impact of heightened competition in the industry. Investors will be closely monitoring further developments and the response from Zomato's management team in the coming weeks and months.
It is worth noting that Macquarie is not the only brokerage firm with a negative outlook on Zomato. Other analysts have also expressed concerns about the company's ability to maintain its market share and profitability in the face of increasing competition. Zomato will need to adapt and innovate to stay ahead in the rapidly evolving quick commerce landscape.
Zomato's recent financial performance has been mixed, with the company reporting a net profit for the March quarter. However, this was largely due to a jump in other income, rather than a significant improvement in the core food delivery business. The company's revenue growth has also slowed down in recent quarters, indicating challenges in expanding its market share.
The entry of JioMart into the quick commerce space is a major development that could reshape the industry dynamics. JioMart's vast network and deep pockets could give it a significant advantage in competing with established players like Zomato. It will be interesting to see how Zomato responds to this new challenge and whether it can maintain its position as a leading player in the Indian food delivery market.
Overall, the outlook for Zomato's stock is uncertain, and investors should proceed with caution. The company faces significant challenges from increasing competition and needs to demonstrate its ability to adapt and innovate to remain successful in the long term.
Source: Zomato share price may fall 46% in 12 months, says Macquarie as competition rises