New Delhi: Global brokerage firm Macquarie has issued a bearish outlook for Zomato, the popular food delivery platform, despite the company's recent financial successes. Despite posting positive earnings in the March 2024 quarter, Zomato is facing a bleak future according to Macquarie, with a predicted 47 percent downturn next year.
The brokerage's pessimism stems from "intensified competition" in the quick commerce sector, where Zomato operates. Macquarie highlights the entry of numerous e-commerce platforms into this space, posing significant challenges for Zomato.
While acknowledging the efficiency of Blinkit, a key player in quick commerce, Macquarie emphasized the competitive pressures faced by Zomato. India's retail sector boasts a substantial Total Addressable Market (TAM), yet Macquarie remains skeptical about consensus estimates due to the escalating competitive landscape.
The quick commerce business has more competitors, including BBnow, Amazon, Flipkart, Zepto, and Swiggy, than the food delivery business, which largely has two players, Macquarie pointed out.
Despite Zomato's recent financial gains, the brokerage has warned of tough times ahead for the food delivery giant amidst growing competition in the industry. Shares of Zomato Ltd. fell to their lowest level in over two months on Friday after Macquarie's report.
The development has been reported days after Prime Minister Narendra Modi praised Zomato CEO Deepinder Goyal at a recent event, emphasizing "hard work over lineage" in India.
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