Zomato: BofA lowers its rankings on Swiggy and Zomato

Mumbai: Financial institution of America (BofA) Securities downgraded its rankings on Zomato and Swiggy, and reduce their goal costs citing expectations of rising losses within the fast commerce enterprise over the subsequent 12-15 months and slowing development in margins within the meals supply unit.

The brokerage has downgraded Zomato from ‘Purchase’ to ‘Impartial’, and reduce its worth goal to ₹250 per share, and Swiggy to ‘Underperform’ from ‘Purchase’ with worth goal slashed to ₹325.

Shares of Zomato ended 2.5% decrease at ₹203.3 on Wednesday, and Swiggy closed at ₹323.9, down 3.9%.

BofA’s worth targets suggest 23% and 0.4% upsides for Zomato and Swiggy, respectively, from Wednesday’s closing degree. “Between Zomato and Swiggy, we discover Zomato higher positioned with scale and first-mover benefit in fast commerce, main to raised unit economics, larger margins and a stronger money place (therefore, Impartial). Given Swiggy’s larger losses in fast commerce, any extended worth battle would delay breakeven (therefore, Underperform),” it mentioned.

Shares of Zomato have declined 26%, and Swiggy is down 40.2% this yr.