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Analyst Sees Strong Growth Outlook for Zomato
HDFC Securities has upgraded Zomato to a 'Buy' rating, driven by improving trends in its food delivery business and market share gains in quick commerce through Blinkit. The firm expects food delivery to grow, forecasting a 20% rise in monthly users and 24% increase in order volume, with Net Order Value (NOV) up 18% year-on-year. This growth is partly thanks to the 'Gold' membership program, launched in Q2 FY26, which should boost user sign-ups and engagement. While recent LPG shortages caused some menu limits, volumes were largely unaffected. However, HDFC Securities noted risks of higher delivery costs if radii must expand to maintain volume. Companies have responded by raising platform fees by 17-19% and increasing minimum order values for discounted sales.
Blinkit Leads in Quick Commerce
In the quick commerce sector, Blinkit is set to expand its market share as competitors focus on making operations profitable. Blinkit benefits from Zomato's strong supply chain and its focus on growth and profits. Analysts predict 10% quarter-on-quarter growth in Net Order Value (NOV) for Q4, driven by 250 new dark stores and steady daily orders, bringing the business near profitability. The quick commerce market in India is a major growth area, expected to grow from $3.65 billion in 2026 to $6.64 billion by 2031. Blinkit held over 50% market share as of September 2025, leading rivals like Zepto and Swiggy Instamart.
Valuation and Stock Performance
Zomato's stock was trading around ₹236.50 on April 1, 2026. The company has a market cap of about ₹228,425 crore. However, its valuation looks very high, with a Price-to-Earnings (P/E) ratio of 988.85 based on earnings up to December 2025. This high P/E indicates investors expect significant future growth. Over the past year, the stock gained about 9.2%. Recent dips of 0.5% last week and 3.9% last month suggest caution despite the upgrade.
Market Share and Sector Dynamics
Zomato holds an estimated 55-58% market share in food delivery, with Swiggy at 42-45%. Blinkit's dominant quick commerce share (>50% as of September 2025) reflects its strategic execution. Zomato's FY25 revenue reached ₹20,243 crore, a 67% year-on-year increase, with net profit at ₹527 crore. The quick commerce sector is expected to grow to over $25 billion by 2030, capturing 15-20% of India's packaged food market. Some analyst reports in early 2025 noted downgrades due to quick commerce competition and a 57.2% drop in Q3 FY25 net profit. However, recent commentary from April 2026 shows analyst firms like ICICI Securities maintaining 'Buy' ratings.
Key Risks and Concerns
Despite the 'Buy' rating, concerns temper the optimistic outlook. The company's P/E ratio of 988.85 suggests growth expectations may be hard to meet without hurting margins. While HDFC Securities raised EBITDA estimates for FY27 and FY28, higher delivery costs in food delivery could be a near-term threat. The quick commerce sector is highly competitive, with rivals like Zepto and Swiggy Instamart expanding. Zomato's Q4 FY25 profit fell 77.7% year-on-year to ₹39 crore, despite revenue growth, showing volatile profitability. A high Debt to EBITDA ratio raises concerns about debt repayment. Foreign investors reduced their stake in December 2024, suggesting a sentiment shift. Managing its large network of stores and delivery staff, alongside constant investment, could hinder profitability.
Analyst Outlook and Valuation Target
HDFC Securities kept their target price at ₹340 per share, suggesting limited immediate upside. Looking ahead, food delivery is expected to grow 18-20% long-term. Blinkit could reach 3,000 stores and improve margins by about 1%. While recent Q3 FY26 results showed a profit increase to ₹102 crore on revenue of ₹16,315 crore, the main question is if growth can outpace costs and competition to justify its current stock price.