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Zomato Share Price Target 2025: Should you Buy Zomato in 2025

Zomato Share Price Target 2025: Should you Buy Zomato in 2025

Zomato share price target 2025

2024 turned out to be a golden year for Zomato as it replaced steel giant JSW Steel in the BSE Sensex- one of the top economic indicators of the country. Once termed as a loss-making entity, Zomato turned its perception upside down by turning profitable in FY 2023 and carrying the momentum in FY 2024 too while reporting profits of INR 351 Cr. Zomato's strong financial performance in 2024 also reflected on its share price which soared 116% from INR 133.5 in Jan 24 to INR 288 in December 24.  

However, in the last one-month Zomato's share price fell 18.13% by INR 53.75. Though price volatility is an inherent part of the stock market but the recent fall in Zomato's stock prices has multiple factors behind it other than market volatility.  

According to many analysts, 2025 could be a testing year for Zomato as it is up against some serious challenges such as a possibly saturated market, competition in the quick commerce industry, stiff competition from Swiggy and some new experiments waiting to be tested.  

The analysts fear that these challenges could either stall their profit run of their last couple of years or strengthen their position further as India's largest consumer internet company. Let's further understand in depth about the reasons behind its success in the recent past, what threats are posed to them and how they could tackle them:  

  

Slow food delivery segment growth   

Zomato has managed to dominate the food delivery market of India with 58% market share. The food delivery segment has been a major revenue contributor for Zomato delivering more than half of its revenues. However, despite the growth in market share their user base and order volume growth have not been the same, which has pushed them to hike their platform fees, push partners and restaurants for more ads and commission and lower their delivery cost.  

Additionally, Zomato's take rate has also taken a hit resulting in their slowest quarter growth at 21.4% YoY. The key for Zomato here will be to increase the number of orders and platform fees further to improve their profitability.  

  

 

Possible saturation of quick commerce space 

Zomato’s Blinkit acquisition has proven to be a game-changing move for the former as it is one of the prime reasons behind its profitability. Blinkit's revenue was up by 129% in the 2nd Quarter of FY25 reaching 1,156 which is about half of Zomato's of FY24 revenue. But the thing to note is that despite such rapid growth in revenue Blinkit is still not profitable and the four-year old Zepto has surpassed them in terms of revenue, which could be a red flag for the investors. The increasing competition in the quick commerce market and a possible saturating market could be a hindrance to the rapid growth of Zomato. 

Zomato and Blinkit are experimenting with new strategies in quick commerce front by introducing more categories and assortments such as Blinkit Bistro to increase profitability.  

With respect to expanding its dark stores, Zomato is changing its thinking of changing its strategy by owning only limited dark stores and operating the rest on franchise model basis. It could reduce the cost pressure on Zomato but at the same time also holds the risk of execution failure.  

However, it still remains to be seen how Zomato will tackle these challenges, but one thing is sure that it's not going to be a smooth sailing for the company, and they will have to continue investing heavily in this business to continue their growth trajectory and increase market share. 

 

 

Hyperpure: Another game-changer for Zomato 

Hyperpure is Zomato’s B2B supplies business which has played a significant role in Zomato’s success. Its revenue almost doubles every year thus contributing substantially to Zomato’s top line. In Q2 FY25, the business of the company rose by 17% QoQ to INR 1,473 Cr. registering adjusted EBITDA loss of just 21 Cr., which indicates that the business is on the verge of profitability. 

Hyperpure’s business trajectory has shown an upwards spike since the acquisition of Blinkit as it is delivering raw materials to retailers and Blinkit sellers.  Zomato’s infrastructural development in densely populated areas where Blinkit’s demand is high will also boost Hyperpure’s business. Additionally, businesses that have partnered with Hyperpure are given listing preferences on Zomato’s app.  

In this case, also people have their doubts if Hyperpure’s service extension to grocery and non-grocery retailers will generate as much profit as supplying to restaurants as the latter’s low margin business with less AOV is more beneficial for Zomato.  

 

 

Zomato’s big bet on going-out business industry 

With the recent rise in interest of the general public in live musicals, concerts and comedy shows, Zomato has picked up on it and has put their bucks into this space to boost their profitability. They acquired Paytm Insider for a handsome sum of INR 2,048 Cr to take on the dominance of market leader BookMyShow in this space. 

Zomato’s target market is mainly GenZ and millenials and besides their food and daily needs they also want to cater to their entertainment and other needs. At the same time for a consumer internet company, it is crucial to diversify its revenue streams and acquiring Paytm Insider is one such step from Zomato in this direction. 

Similar to quick commerce, the live events and ticketing sector is also flourishing. EY-FICCI report in March 2024 stated that this sector rose by 20% in 2023 and expanded to a market size of INR 8,800 Cr. further expected to reach INR 14,700 Cr.   

Currently, there are mainly two big names in this space- BookMyShow and Paytm Insider but given the potential of the sector it is expected that offline event management and marketing companies could soon enter M&As and increase competition in this space. Also, Swiggy has also entered the events and ticketing business with its app “Scenes”. 

 

Way forward for Zomato 

Starting as a restaurant finding company in 2010, Zomato is one such company which has not shied away from experimenting as it has always changed itself with the market dynamics. It has taken some bold decisions and, contrary to industry experts' view, has succeeded in many of its endeavors.  

However, as the company is growing, some major hindrances are coming their way, and it is expected of them to keep evolving and maintaining the balance between profitability and keeping the quality level intact. Fundraising from different sources is one thing Zomato is focusing on to keep expanding their horizon and coming up with new ways to maintain their dominance in certain sectors and deepen their presence in others. 

Investors should also make sure that they evaluate the fundamentals of Zomato, assess their valuation and corporate governance before making any investment decision in the company. 

 

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