Zomato share price falls 5%, plunges 18% in 3 days. Is there more pain ahead for this new-age tech stock?

Falling for the third consecutive session, Zomato share price cracked 5 per cent in morning trade on the BSE on Wednesday, January 22. Zomato shares opened at ₹207.40 against its previous close of ₹214.65 and dropped 5.1 per cent to the level of ₹203.80. Considering this price, the stock has crashed 18 per cent in the last three consecutive sessions (including today). 

What is driving Zomato share price down?

The new-age tech stock has been falling since it declared its December quarter (Q3) results. On January 20, the company reported a 57.3 per cent decline in its net profit to ₹59 crore for Q3FY25, compared to ₹138 crore in the corresponding period last year. Sequentially, the decline was bigger as Deepinder Goyal-led food delivery and hyperlocal quick commerce giant's profit in Q2FY25 was ₹176 crore.

Zomato's revenue from operations rose 64.4 per cent to ₹5,405 crore in Q3, compared to ₹3,288 crore in the year-ago period. The gross order value (GOV) of its B2C business (quick commerce, food delivery, and going-out) rose 57 per cent to ₹20,206 crore in the quarter under review.

The real disappointment came from the margin front due to rapid store expansion to accommodate orders from its quick-commerce service, Blinkit. Blinkit reported an EBITDA loss of ₹30 crore, compared to a positive EBITDA of ₹48 crore in the year-ago period. However, Zomato's EBITDA jumped to ₹162 crore, compared to ₹51 crore in the same period last year.

Zomato stock: Is there more pain ahead?

Despite weak Q3 numbers, experts appear positive about the stock for the long term. They believe Blinkit’s growth investments are near-term pain but long-term gain for the company and the stock.

Brokerage firm JM Financial, which has a buy call on the stock with a target price of ₹280, pointed out that in Q3, Blinkit not only exceeded the 1,000 stores count but also stepped up plans to reach the 2,000 stores target by December 2025, ahead of earlier guidance of December 2026.

"While this strategy could aggravate Blinkit’s absolute losses as well as capex in the near term, it should help it sustain GOV growth of more than 100 per cent year-on-year in FY25 and FY26, and thus maintain market leadership," said JM Financial.

"We postulate Blinkit could also see a sharp improvement in its profitability once store expansion slows down in the second half of FY26. While near-term uncertainties in Blinkit’s profitability trend may lead to pressures in the stock, we strongly suggest long-term investors use the opportunity to build sizable positions," said JM Financial.

Brokerage Nuvama Wealth Management also noted that Blinkit dark store additions exceed expectations, driving faster growth. This may lead to short-term delays in profitability due to higher upfront costs for store openings.

Nuvama also has a buy call on the stock with a target price of ₹300. The brokerage firm believes the “bunching up of cost for dark store addition shall hurt profitability in the short term but shall ultimately lead to bunching up of profitability in future quarters as these stores mature.”

Zomato shares: What technical indicators signal?

The stock has clocked an impressive gain of over 50 per cent over the last year. However, after the December quarter results, it appears to be in a bearish mode. 

Mandar Bhojane, an equity research analyst at Choice Broking, pointed out that Zomato has exhibited a bearish technical setup on the daily chart, forming a double-top pattern breakdown accompanied by lower highs and lower lows. The double-top pattern indicates downside targets of ₹190 and ₹180, suggesting further weakness if the bearish momentum continues.

Bhojane highlighted that the stock price is trading below all major exponential moving averages (20, 50, 100, and 200), which confirms the ongoing bearish trend. The Relative Strength Index (RSI) is at 27.77, trending downward, signalling that the stock is oversold but lacks signs of reversal. These technical indicators reinforce a cautious approach for traders and investors in the short term.

"For a bullish outlook, Zomato must sustain a strong breakout above ₹220 and ₹240 with significant volume and clear reversal patterns. Until then, the stock remains under pressure, with the bearish sentiment dominating. Investors should focus on monitoring these levels closely while being prepared for further downside in the absence of a recovery signal," said Bhojane.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.