Bernstein maintained an ‘outperform’ on Zomato, as it remains their top internet pick. It has a target price of Rs 310, implying a 35% upside. Zomato is playing the long game, as its focus is shifting toward growth and profitability, according to the brokerage.

The competitive intensity of quick commerce has been a key point of debate, given the land grab and ongoing increase in marketing dollars across Zomato, Swiggy and Zepto, Bernstein said.

However, unlike pre-IPO mode, the focus of the company currently is more on quick balanced-growth, while delivering medium term profitability, the brokerage said.

“Even if we play out a more competitive scenario next few quarters, we believe there’s a rational limit to price competition, given Swiggy’s lower margin structure. We expect Zomato to continue to build on quick commerce leadership,” said the brokerage.

Land Grab Of Dark Stores

The evolution of Zomato has been a shift between growth and profitability. Zooming out, 2022-23 was proving out profitability to investors with stock up 2 times. Shortly after, 2024-25 has seen land grab with the stock down 20%.

Blinkit has led the dark store expansion, guiding a 2 times increase in stores by December 2025. In comparison, Instamart announced its plans to expand quick commerce to more than 80 cities as well, Bernstein noted.

Margin Targets Push Out

Rising competitive intensity has led to push out breakeven targets for Blinkit by up to 12-18 months. The margin push out is driven by higher customer acquisition costs, dark store costs and CAC or marketing dollars.

The brokerage notes that e-commerce companies like Flipkart and Amazon are also entering QC accelerating competition.

Laying Foundation For QC Leadership

Despite short term intensity, the brokerage expects Blinkit to remain the leader, driven by early mover advantage and strong execution.

Zomato investors may take some time to adjust to this ‘new’ normal of the company’s losses, but the upside is that this should translate into stronger growth profile. The brokerage estimates around 70% growth in the coming years. This growth is, in fact, ultimately the key to creating value in the stock and unlocking a bigger profit pool, according to Bernstein.

Zomato Share Price

Zomato stock rose as much as 2.99% during the day to Rs 229.34 apiece on NSE. It was trading 2.44% higher at Rs 288.1 apiece, compared to a 0.8% advance in the benchmark Nifty 50 as of 10:23 a.m.

It has risen 39.34% in the last 12 months. Total traded volume so far in the day stood at 0.7 times its 30-day average. The relative strength index was at 49.3.

Twenty five of the 30 analysts tracking the company have a ‘buy’ rating on the stock, one recommends a ‘hold’ and four suggest a ‘sell’, according to Bloomberg data. The 12-month analysts’ consensus target price on the stock is Rs 288.71, implying an upside of 26.6%.

. Read more on Business by NDTV Profit.Zomato’s focus currently is more on quick balanced-growth, while delivering medium term profitability, Bernstein said.  Read MoreBusiness, Markets, Notifications 

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