BoFA Securities has downgraded both Zomato and Swiggy, citing rising losses in the quick commerce segment and a slowdown in food delivery growth as key concerns.
Zomato has been downgraded to Neutral from Buy, with the target price cut to ₹250 from ₹300. Swiggy, which is still unlisted, has been downgraded to Underperform from Buy, with the target price reduced sharply to ₹325 from ₹420.
According to BoFA, the downgrade is primarily driven by expectations of prolonged competition in quick commerce, leading to structurally higher losses. While the food delivery segment has not witnessed a material slowdown, the brokerage expects cash flows to shrink for both players going forward.
BoFA now estimates EBITDA for FY26/FY27 to be 20–50% below current consensus levels for both Zomato and Swiggy. The firm expressed caution over the operating environment, especially in quick commerce, where intense competition and unsustainable models could weigh on profitability for an extended period.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making any investment decisions.
