Zomato, Swiggy shares crack up to 5% after BofA downgrades stocks, cuts target prices

Stock market today: Shares of India's two leading food delivery aggregators—Zomato and Swiggy—have faced heavy selling pressure in recent trading sessions as global brokerages turned cautious about their near-term growth prospects, with the latest downgrade coming from global brokerage firm BofA.

Citing rising losses in the quick commerce space, the brokerage downgraded Zomato’s shares to 'Neutral' from 'Buy' and trimmed the target price to ₹250 per share from ₹300. For Swiggy, the rating was lowered to 'Underperform' from earlier 'Buy,' while the price target was reduced to ₹325 per share from ₹420.

Reacting to this negative development, Swiggy shares tumbled 3.4% in today's trade, March 26, to ₹326 apiece, while Zomato plunged 5.1% to slip below ₹200, touching at ₹199.80.

The brokerage forecasted that Zomato's and Swiggy's earnings before interest, tax, depreciation, and amortisation (EBITDA) for FY26 and FY27 could be 20% to 50% lower than consensus estimates.

This negative outlook comes just after Macquarie, on Tuesday, turned cautious on both Swiggy and Zomato, favouring quick commerce companies such as Devyani International and Westlife Foodworld as it believes these companies are better positioned to benefit from consumption recovery amid rising discretionary spending.

Meanwhile, Zomato and Swiggy have been under pressure for quite some time due to the rapid expansion of dark stores by competitors and concerns over lofty valuations, which have put them in a downward spiral since December.

Intensifying competition has forced both companies to invest aggressively in expanding their dark store networks, which has impacted their financial performance in Q3FY25.

Meanwhile, both companies are set to face another competitor in the public markets, as India’s BigBasket is reportedly planning an IPO within the next 18 to 24 months. Additionally, recent reports indicate that Zepto is looking to raise $250 million through a secondary sale ahead of its planned listing.

Swiggy, Zomato are now down up to 46% from their recent peaks

The once high-flying Zomato stock, which maintained a one-way rally between March 2023 and December 2024, is now trading at ₹205, 32.6% below its all-time high of ₹304.70 apiece.

Swiggy has faced even steeper losses, correcting 46% from its recent high and currently trading at ₹332 per share. The crash has also pushed the stock to trade below its IPO price of ₹390 apiece.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.