Shares of Zomato Ltd and One 97 Communications Ltd (Paytm) climbed 2-3 per cent in Thursday's trade after a recent 13-20 per cent selloff. Paytm shares were up 2.59 per cent at Rs 862.90, while those of Zomato rose 3.21 per cent to Rs 223.40, as investors felt the recent growth concerns were unwarranted.
In the case of Zomato, HSBC noted that aggressive store additions is leading to heightened losses and, hence, the recent stock correction. It said quick commerce (Zomato, Swiggy) stocks have corrected recently on rising losses due to aggressive supply expansion. Blinkit (Zomato's QC business) already has 1,000-plus stores by Q3 and is now looking to expand to 2,000 stores by the end of 2025. This is on top of an aggressive expansion in the recent months, HSBC said. In 3Q alone, the company added 216 stores!
"Overall, we believe 4QFY25 is likely to bear the worst impact of this aggressive expansion across players and economics should improve thereafter," it said.
Analyst targets vary for Zomato, ranging from Rs 140 to Rs 400. Kotak retained its 'Buy' on Zomato with a revised fair value of Rs 275 from Rs 305 earlier. MOFSL suggested a target price of Rs 270 and maintained its 'Buy' rating on the stock.
CLSA suggested a target price of Rs 400, BofA Securities Rs 375, UBS Rs 320 and Nomura India Rs 290. Nomura India said key monitorables for Zomato would now be Blinkit’s gross order value (GOV) market share and continuation of positive contributing margin.
Zomato shares had plunged 10.51 per cent on Tuesday and 3.64 per cent on Monday. It was flattish on Wednesday. Despite Thursday's gains, the stock is down 19.37 per cent in 2025 so far.
Paytm share price targets Paytm shares were down recently as Q3 contribution margin missed analyst estimates amid higher DLG (default loan guarantee) cost. That said, experts believe Paytm continued to witness an improvement in its business metrics, adding disbursements have started recovering and are off the lows of Q1 and gross merchandise value (GMV) is also improving at a steady rate.
YES Securities and Emkay Global see Paytm shares at Rs 1,050. JM Financial finds the stock worth Rs 1,250.
"We largely maintain our contribution profit estimates for FY25/FY26. We estimate Paytm to turn Ebitda positive by FY27. We value Paytm at Rs 950, based on 18 times FY30E Ebitda discounted to FY26E, which corresponds to 6.1x FY26E sales. We retain NEUTRAL rating on the stock," MOFSL said.
Paytm shares declined 1.42 per cent on Wednesday, 4.97 per cent on Tuesday and 0.21 per cent on Monday. It is down 13 per cent year-to-date.