Zomato share price drops 5% as Macquarie sees nearly 50% downside. Here's why

Macquarie reiterated its "underperform" stance on the stock with a price target of ₹96- a downside of 46 per cent from Thursday's close price.

Zomato share price: The share price of Zomato fell over 5 per cent today (May 31) as foreign brokerage Macquarie forecast nearly 50 per cent decline in the share price of the company in the next 12 months citing increased competition in the quick commerce sector. Shares of Zomato were trading at ₹173.80 apiece on the NSE today after Macquarie reiterated its "underperform" stance on the stock with a price target of ₹96- a downside of 46 per cent from Thursday's close price.

Zomato share price: The logo of Indian food delivery company Zomato is seen (Reuters)

What Macquarie said on Zomato stock

Macquarie held its 'underperform' rating on Zomato stock since May last year when it downgraded it from its 'neutral' call. Macquarie highlighted increasing competitive pressure in the sector as the main reason for caution. This comes as Reliance Industries-owned JioMart was reportedly planning to offer 30-minute grocery delivery in multiple cities starting next month.

Reports claimed that JioMart plans to initially provide 30-minute grocery services in eight cities and then expand to the 20-30 cities in the country.

What Macquarie said on Blinkit stock

Macquarie sees a downside in Blinkit stock as well contrary to Goldman Sachs' recent valuation which assigned the company an even higher multiple than the Zomato's food delivery business.

Zomato Q4 results

This comes as Blinkit turned EBIT positive in the March quarter of FY24 as revenue more than doubled year-on-year to ₹769 crore. Zomato reported a net profit of ₹175 crore for the same period and a spike in net profit which was supported by a 37 per cent rise in its other income to ₹235 crore.