Zomato Shares Plunge 9% After Q3 Profit Drop: Should You Buy, Sell, or Hold?

The sharp decline in Zomato’s share price, driven by weak Q3 results, has raised concerns among investors, especially as the company faces challenges with profitability due to the expansion of Blinkit. Here’s an analysis to help guide your decision:

Key Considerations

Technical Analysis

Bearish Momentum: The stock has fallen below the 200-day SMA, with a ‘Double Top’ breakdown, signaling potential further declines.
Support and Resistance:
- Support: Around ₹200.
- Resistance: Between ₹245-₹250.
Outlook: The stock must decisively break above resistance to regain a bullish outlook. Until then, caution is advised.

Fundamental Analysis

Q3 Performance:
- Net profit fell by 57.2% YoY to ₹59 crore, indicating margin pressures.
- Expenses grew faster than revenues due to Blinkit’s rapid expansion.
Future Growth:
- Blinkit offers long-term potential in quick commerce, though profitability will take time as new stores mature.
- Food delivery growth is stable, with a 17% YoY rise in revenue.
Brokerage Views:
- Nuvama: BUY with a target price of ₹300, expecting long-term profitability as expansion costs normalize.
- Motilal Oswal: BUY with a target price of ₹270, citing Blinkit’s generational growth potential.

Should You Buy, Sell, or Hold?

Buy:

If you believe in Zomato’s long-term potential in quick commerce and food delivery, the current dip may offer a buying opportunity, especially near the ₹200 support level.
Brokerages see significant upside in the medium to long term (₹270–₹300 target).

Sell:

If you’re concerned about short-term profitability issues or the broader bearish trend, consider exiting, especially if the stock breaks below ₹200.

Hold:

If you are already invested and can weather near-term volatility, holding might be prudent, as the stock is expected to recover once expansion costs stabilize.

Final Advice

Assess your risk tolerance and investment horizon:

Short-term traders: Wait for a clear reversal above ₹245 before re-entering.
Long-term investors: Consider accumulating at dips, as Zomato has the potential for significant growth in the quick-commerce space.

Diversify your portfolio and consult a certified financial advisor for personalized advice.