Zomato’s stock took a sharp hit, dropping 9% in a single session and 16% over two days after the company reported a 57% decline in net profit for Q3 FY25. The major reason? Aggressive expansion of Blinkit, Zomato’s quick-commerce arm. Investors reacted strongly to the increased spending on new dark stores, which squeezed profitability. However, analysts remain optimistic about Zomato’s long-term growth potential, believing that the company’s execution strengths will pay off.
Let’s dive into the numbers to understand the impact of Blinkit’s expansion on Zomato’s financials.
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Zomato’s Q3 FY25 financial performance
| Metric | Q3 FY25 | Q3 FY24 | Q2 FY25 | Y-o-Y Change | Q-o-Q Change |
| Net Profit | ₹59 crore | ₹138 crore | ₹176 crore | -57% | -66.5% |
| Revenue | ₹5,405 crore | ₹3,288 crore | ₹4,799 crore | +64% | +12.6% |
| Adjusted EBITDA | ₹285 crore | ₹125 crore | ₹331 crore | +128% | -14% |
| Gross Order Value (GOV) | ₹20,206 crore | ₹12,876 crore | ₹19,841 crore | +57% | +2% |
| Food Delivery GOV | ₹9,913 crore | ₹8,488 crore | ₹9,696 crore | +16.8% | +2.3% |
| Blinkit GOV | ₹7,798 crore | ₹3,598 crore | ₹6,145 crore | +117% | +27% |
| Blinkit Revenue | ₹1,399 crore | ₹644 crore | ₹1,156 crore | +117% | +21% |
Key financial highlights:
The impact of Blinkit’s expansion on Zomato’s profitability
Blinkit has been a crucial part of Zomato’s future growth plans, but its aggressive expansion is weighing down short-term profitability.
- Dark store count: Increased from 791 in Q2 FY25 to 1,007 in Q3, leading to higher operational expenses.
- Target revision: Management now aims for 2,000 dark stores by December 2025, a year earlier than previously planned.
- EBITDA losses: Blinkit’s adjusted EBITDA margin fell by 120bps quarter-on-quarter to -1.3%.
- Higher AOV (Average Order Value): Increased to ₹707 from ₹660 in Q2 FY25, indicating positive customer traction despite rising costs.
Despite these challenges, analysts believe that as these stores mature, profitability will improve.
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Market reaction and stock performance
Investors reacted negatively to Zomato’s Q3 results, leading to a steep 9% fall in share price, the biggest drop since June 2024. Over two days, Zomato’s stock declined 16%, touching an intraday low of ₹210.15 on January 22.
At ₹222.25, the stock is down 27% from its 52-week high of ₹304.50 but remains 73% higher than its 52-week low of ₹128.10 recorded in January 2024. While the stock had delivered solid 71% returns over the past year, it has seen a 19% correction in the last month alone.
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What are analysts saying?
Despite short-term losses, brokerages remain cautiously optimistic about Zomato’s future. Here’s what leading analysts predict:
| Brokerage | Rating | Target Price | Key Comments |
| Nomura | Buy | ₹290 (cut from ₹320) | Believes Blinkit will secure a top-2 position in quick commerce despite rising costs. |
| Jefferies | Hold | ₹255 (cut by 7%) | Supports Zomato’s aggressive expansion but accounts for short-term earnings decline. |
| Motilal Oswal | Buy | ₹270 (cut by 30%) | Calls Blinkit a “generational opportunity” despite near-term profitability challenges. |
| Nuvama | Buy | ₹300 (cut from ₹325) | Predicts profitability will improve once new stores mature. |
| Emkay Global | Buy | ₹310 | Expects Blinkit losses to continue for 1-2 quarters but remains positive on long-term growth. |
| Macquarie | Underperform | ₹130 | Warns of competitive pressures and sustained Blinkit losses. |
| BofA | Buy | ₹375 | Sees over 100% GOV growth for Blinkit in FY25-26, but notes near-term losses. |
What’s next for Zomato and Blinkit?
Zomato’s food delivery business remains stable, but Blinkit’s expansion is making investors uneasy. While quick commerce presents a massive opportunity, the near-term challenges include:
- High fixed costs: Blinkit might need 4,000 stores by FY30 to sustain order volume growth, leading to increased capital expenditure.
- Margin pressures: Blinkit’s EBITDA margin fell despite growth, delaying profitability improvements.
- Competition: With Zepto and Swiggy Instamart also expanding aggressively, the quick commerce battle is intensifying.
However, Zomato’s management remains confident in its long-term vision. They expect 20% GOV growth in food delivery annually and over 100% GOV growth for Blinkit in FY25-26. If executed well, this could solidify Zomato’s leadership in both food delivery and quick commerce.
Conclusion: Should investors worry?
Zomato’s recent stock dip reflects short-term market concerns, but analysts believe the company is making strategic investments for long-term dominance. The next few quarters will be critical in proving whether Blinkit’s aggressive expansion will pay off or continue to erode Zomato’s bottom line.For investors, this presents a classic high-risk, high-reward scenario. While some brokerages have cut price targets, they still maintain a bullish outlook, suggesting that those with a long-term perspective may find value in Zomato’s current correction.
