Zomato Ltd shares might have fallen 17 per cent in 2025 so far, they stare at 44 per cent further downside if Macquarie's fresh target price on the stock post Q3 results are taken into consideration.
It said Zomato's December quarter earnings were below consensus and its estimates, driven by investments in Blinkit and higher employee expenses.
Macquarie said the consensus forecasts Blinkit gross order value (GOV) to increase 3.5 times over FY25-28e (to $11 billion), alongside an expansion in adjusted Ebitda margin (percentage of GOV) from minus 1.3 per cent now to 3.5 per cent.
"In the face of hyper-competition, we continue to flag material downside risk particularly to this margin expansion assumption, whilst even noting scope for a prolonged period of negative margins," it said.
In the food delivery segment, it sees a mild downside to consensus forecast of 20 per cent 3-year GOV CAGR and 4.5-5 per cent adjusted Ebitda margin for FY26-28.
Macquarie said it regards Zomato as an efficient quick commerce and food delivery platform, but for the shares we see limited margin of safety. It sees rising competition in quick commerce denting consensus forecasts. It said its DCF-based price target of Rs 130 implies 55 times FY27 PE (adjusted for treasury income).
In the third quarter, Zomato's GOV in quick commerce grew 120 per cent YoY, beating Macquarie's estimates due to strong MTU addition. But this was likely driven by higher marketing spends, resulting in adjusted Ebitda Margin at minus 1.3 per cent of GOV against expectations of a near-breakeven.
Blinkit added 216 dark stores in Q3. It had a total of 1,007 stores as on December 31. The Zomato management brought forward its guidance of 2,000 stores to December 2025 against December 2026 earlier.
In the food delivery segment, GOV grew 17 per cent YoY, a miss, with MTU seeing a mild QoQ decline to 20.5 million. Adjusted Ebitda margin expanded 75 bps QoQ (4.3 per cent of GOV).