Zomato's shares dropped 5% after Jefferies downgraded the stock to 'Hold' and cut its target price by 18%. The downgrade cites rising competition and discounting pressures affecting profitability, prompting lower earnings projections for FY25-27.

Shares of Zomato fell by 4.8% following Jefferies' downgrade of the stock from 'buy' to 'hold' and a 18% cut in the target price. Concerns over intensifying competition in the quick commerce segment and the impact on profitability were cited.

Jefferies believes aggressive moves by incumbents and entry of new players in the QC space can result in higher discounting which may pose a threat to the company's profits in the medium term.

Investing.com-- Jefferies downgraded Indian food delivery firm Zomato Ltd (NS:ZOMT) on Monday, stating that the stock was likely to see a year of consolidation after strong gains in 2024 due to heightened competition and slimmer margins.

Zomato's share price dropped after Jefferies, a financial services firm based in New York, downgraded the stock to 'Hold'

Jefferies believes that Zomato's valuations are not "excessively expensive" in the context of the strong execution and opportunity. However, the rising competition in the Quick Commerce space worries them.

Zomato's stock price was down 4.19% to Rs 253.75 on the Bombay Stock Exchange (BSE). Earlier, the shares of Zomato hit an intra-day low of Rs 251.55.

Zomato receives positive outlook from analysts, maintaining "Overweight" rating with target price of 355, despite recent share tumble.

Jefferies revised its target price for Zomato shares to Rs 275, down from Rs 335, indicating just a 1% upside from the stock's previous closing price.