Zomato, Swiggy share prices slip over 2.5% as BofA Securities cautious on food aggregators; check details

Shares of food aggregator Zomato tumbled over 2.5% on Wednesday, March 26, as global brokerage firm Bank of America (BofA) Securities became cuatious about the company amid a slowdown in its quick commerce section.

The downgrade was mainly amid expectations of rising losses in quick commerce and slowing food growth, BofA Securities said in a note.

According to news reports, the brokerage had downgraded mainly due to expectations of rising losses in the quick-commerce segment and slowing food growth. In food delivery, while not a material slowdown, cash flows are expected to shrink, BofA has said.

Meanwhile, for the quick commerce segment, prolonged competition will lead to higher losses for both Swiggy and Zomato, the brokerage estimates.

During its December quarter earnings announcement, Zomato’s chief financial officer, Akshant Goyal, had mentioned that Blinkit will likely remain loss-making in FY25 and FY26 on the back of investments.

"As we continue to bring forward store expansion, our networks may have to carry a greater load of under-utilised stores, which will impact near-term profits in the next one or two quarters. These investments will, however, also likely result in GOV growth remaining meaningfully above 100%, at least for FY25 and FY26," Akshant Goyal had said.

While Zomato co-founder and CEO Deepinder Goyal had mentioned that the losses in the quick commerce business were largely on account of pulling forward the growth investments in the business that “we would have otherwise made in a staggered manner over the next few quarters.”

“As of now, it seems like we will get to our target of 2,000 stores by Dec 2025, much earlier than our previous guidance of Dec 2026," Deepinder Goyal had commented.

This week, another global brokerage, Jefferies, had also raised concerns over rising competition in the quick commerce space.

After Zomato’s shares more than doubled in value in 2024, analysts at Jefferies predict that 2025 could be a breather year, with the stock likely shifting gears into a phase of price consolidation.

The brokerage, as per news reports, said that aggressive strategies by existing players and the entry of new competitors could lead to higher discounting, posing risks to Zomato's medium-term profitability.

Jefferies had sharply reduced Blinkit's EBITDA forecast for FY26-27 and halved its target multiple for Blinkit to 6x, the report added.