Blinkit powers Zomato’s Q2 growth, brokerages bullish on stock

Zomato’s stock rallied following its Q2 FY25 earnings, revealing a net profit of ₹36 crore compared to a ₹251 crore loss in the same quarter last year. The company saw revenue spike 72% to ₹2,848 crore, driven by significant growth in its quick commerce arm, Blinkit. Blinkit’s contribution-positive status for the first time has transformed it into a critical growth driver for Zomato. This shift is pivotal as Zomato competes against its primary rival, Swiggy, which also operates a similar quick commerce division, Instamart.

Brokerages, including Motilal Oswal and Kotak Securities, maintain a bullish outlook on Zomato’s stock, driven by Blinkit’s performance and the steady growth in its food delivery segment. Kotak Securities projected a 23% year-over-year increase in food delivery gross merchandise value (GMV), expecting it to reach ₹9,800 crore. Blinkit’s GMV growth was equally impressive, expanding 114% year-over-year. Motilal Oswal emphasized Zomato’s successful market share gains, with Blinkit outperforming its competitors in average order value and take rates.

The momentum reflects Zomato’s strategic focus on diversifying revenue streams. Deepinder Goyal, Zomato’s founder, noted that Blinkit’s profitability aligns with the company’s long-term growth ambitions. Brokerages have revised their price targets upward, with HSBC and Motilal Oswal forecasting a range of ₹315-₹330, citing strong execution and stable growth across both Blinkit and food delivery services.

Expert Opinion: Brokerages Bullish Amid Impressive Turnaround

Brokerages are optimistic about Zomato’s future trajectory. HSBC raised its target price to ₹330, underscoring Blinkit’s rapid growth and competitive edge over Swiggy’s Instamart. Motilal Oswal highlighted Zomato’s strategic market share expansion, growing from 54% in FY22 to 58% in Q1 FY25, due to its better execution. Analysts assert that as Blinkit scales up, it will further contribute to Zomato’s profitability.

Future Projections: A Promising Outlook for Zomato

With Zomato’s share price trading at ₹275.20, analysts suggest the stock has a promising upside. The Q2 success has fueled confidence in Blinkit’s trajectory, especially as it expands its store network. Experts predict Blinkit to reach adjusted EBITDA profitability by FY25, making Zomato a compelling investment as it solidifies its dominance in both the food delivery and quick commerce markets.