Zomato, a food delivery aggregator and provider of Quick Commerce services, has been downgraded by Jefferies from its previous rating of "buy" to "hold" and has also lowered its price target.

Jefferies has reduced its price target by 18% on Zomato, from 335 to 275. The updated price target is almost identical to Zomato's Monday closing price. Zomato's stock has dropped 13% from its all-time high of 304.

The brokerage expressed concern in its note about the company's profitability due to growing competition in the Quick Commerce market. In addition to Zepto, Amazon, Swiggy's Instamart, and Zomato's Blinkit, other competitors are fighting for a piece of the Quick Commerce action.

After more than doubling in value in 2024, Zomato's shares may experience a year of consolidation in 2025, according to Jefferies, which also noted that the stock's valuations are not "excessively expensive" given the opportunity and strong execution. They are concerned, though, about the growing competition in the Quick Commerce market.

According to the Jefferies note, aggressive moves by incumbents and the entry of new players will probably lead to higher discounting, which could endanger the medium-term profitability.

Consequently, Blinkit's Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) forecast for the fiscal years 2026 and 2027 has been drastically reduced by Jefferies, which has also slashed its target multiple for the same to 6x.

Jefferies has reduced its EBITDA estimate for Zomato as a whole by 12% for the fiscal year 2026 and by 15% for the fiscal year 2025. The projected profitability for the fiscal years 2026 and 2027 has been reduced by 17% and 18%, respectively.