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  5. Zomato's share price jumps over 3%; here are the reasons behind the rally

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Zomato's share price jumps over 3%; here are the reasons behind the rally

Upstox
By Upstox News Desk

4 min read | Updated on February 25, 2025, 17:05 IST

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SUMMARY

Global broking firm Bernstein reaffirmed its bullishness on Zomato as competition in the quick commerce space heats up

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ZOMATO
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Experts anticipate Zomato's Q3 revenue to be between ₹5,300 crore and ₹5,650 crore, marking a 65-73% YoY increase.

Experts anticipate Zomato's Q3 revenue to be between ₹5,300 crore and ₹5,650 crore, marking a 65-73% YoY increase.

Stock investors on Tuesday, February 25, gained confidence in food delivery giant Zomato as its shares soared over 3% during intraday trade on multiple factors.

At 11:30 AM, Zomato shares surged 3.14% to ₹229.68 per share on the National Stock Exchange (NSE). The scrip had rebounded 100% from its 52-week low of ₹144.30 touched on March 14, 2024. The company had touched its 52-week high on December 9 last year at ₹304.70 on the 50-share index.

At close, shares of the food giant settled at ₹225.80 apiece on NSE, rising 1.40%.

Here’s what adding to the recent rally on the stock:
Bernstein’s positive outlook: The global broking firm reaffirmed its bullishness on Zomato as competition in the quick commerce space heats up.
According to a Moneycontrol report, Bernstein noted that competition in quick commerce remains a key debate, driven by aggressive expansion and rising marketing spends across Zomato, Swiggy, and Zepto. However, unlike the pre-IPO phase, the broking believes the focus is now more balanced – pursuing growth while ensuring medium-term profitability.

Even if competition intensifies in the coming quarters, it sees a rational limit to price wars due to Swiggy’s lower margin structure. Bernstein expects Zomato to strengthen its leadership in quick commerce.

Also read: SENSEX trades 200 pts higher, NIFTY50 above 22,550; Tata Investment Corp surges 10%
NIFTY50 rejig: Jio Financial Services Ltd and Zomato Ltd will join the NIFTY50 index from March 28, 2025. The inclusions will be accompanied by the removal of Bharat Petroleum Corporation Ltd (BPCL) and Britannia Industries Ltd from the National Stock Exchange's benchmark index.

In December 2024, Zomato became the first new-age company to join the benchmark BSE index SENSEX, replacing JSW Steel. The inclusion led to an inflow of $513 million (₹4,362 crore) into Zomato.

Zomato and Jio Financial Services are expected to see major inflows following the inclusion in March, and BPCL and Britannia are estimated to see outflows.

“Zomato Ltd (average free-float market capitalisation ₹1,69,837 crore) and Jio Financial Services Ltd (average free-float market capitalisation ₹1,04,387 crore) have been included in the Nifty 50 index, as the 6-month average free-float market capitalisation of these companies within the eligible universe is at least 1.5 times the 6-month average free-float market capitalisation of the smallest constituents, i.e., Bharat Petroleum Corporation Ltd (average free-float market capitalisation ₹60,928 crore) and Britannia Industries Ltd (average free-float market capitalisation ₹64,151 crore), respectively,” NSE said in a release dated February 21.

Read more: NIFTY50 rejig: Jio Financial Services and Zomato to enter benchmark index from March 28
Blinkit gets cash from Zomato: According to a report by the Economic Times, quick commerce platform Blinkit has received a ₹1,500 crore fund infusion from its parent company Zomato, according to a regulatory filing made with the Registrar of Companies (RoC).
A person in the know told ET that the cash infusion from Zomato into Blinkit is to mainly help the firm cover its losses as it undertakes aggressive expansion and faces intense competition in the quick commerce sector.

Meanwhile, Zomato had reported a 57.2% decline in consolidated net profit to ₹59 crore for the third quarter ended December. The company had earned a net profit of ₹138 crore in the same quarter a year ago.

The company's consolidated revenue from operations stood at ₹5,405 crore, as against ₹3,288 crore in the corresponding October-December quarter of the previous financial year.

However, during the quarter under review, Zomato's total expenses also shot up to ₹5,533 crore, from ₹3,383 crore in the corresponding period of 2023-24.

Also read: Zomato shares in a free fall as Q3 results, cautious management commentary dent investor sentiment; Swiggy also tumbles
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