BofA Downgrades Swiggy, Zomato Citing Rising Losses In Q-Com

Global brokerage firm BofA Securities has downgraded ratings for Zomato and Swiggy, citing concerns over their future growth prospects and the increasing competitive pressure in the food delivery industry.

The brokerage firm expects losses to rise in the quick commerce business over the next 12-15 months. It further believes that new entrants in the QC segment will further push incumbents towards higher losses in the near term on the back of platform-led discounts and higher marketing expenses. 

On the other hand, the food delivery market is also expected to suffer lower cash flows. “We expect the food delivery GOV growth in the next few quarters to slow to 16-18% year on year from the market expectation of around 20% YoY growth,” BofA Securities said in a note.

As a result, the brokerage downgraded Zomato’s shares to ‘Neutral’ from ‘Buy’ and trimmed the target price to INR 250 per share from INR 300. For Swiggy, the rating was lowered to ‘Underperform’ from earlier ‘Buy,’ while the price target was reduced to INR 325 per share from INR 420.

Stock Market Performance: Shares of Swiggy

and Zomato dipped 4.8% and 4.7% intraday to INR 321.30 and INR 199.90, respectively, following the downgrade. Both the foodtech giants closed the day’s trading session at INR 323.75 and INR 203.30, respectively. 

While Zomato debuted on Dalal Street on July 23, 2021, at a listing price of INR 115 per share, Swiggy entered Indian bourses last year at a listing price of INR 412 on BSE. 

Both Swiggy and Zomato’s stocks have fallen 40.18% and 26.05%, respectively, on a year-to-date basis against the Sensex’s fall of 1.55% during the same period. 

The Indian stock market experienced record lows in late 2024 and throughout 2025 until last week, led by factors like a slowdown in corporate earnings growth, FII’s aggressive share offload, exacerbated by rising US bond yields and a strong dollar against the rupee that made US markets more attractive.

Growth Numbers For The Recent Quarters Vs BofA’s Projections: Notably, BofA also anticipated that both foodtech platforms’ EBITDA for FY26-27 could be 20-50% lower than the consensus estimates. 

Zomato incurred a net profit decline of 57.2% YoY and 66% YoY to INR 59 Cr in Q3 FY25 because of a slowdown in the food delivery segment alongside an increase in Blinkit’s adjusted EBITDA loss due to rising competition in QC.

While its other vertices witnessed over 90% growth, the core food delivery vertical saw a muted growth of 17% YoY on adjusted revenue. 

For Q3 FY25, Swiggy’s consolidated net loss rose 39.1% YoY and 27.7% QoQ to INR 799 Cr, driven by a standalone loss of INR 527.68 Cr from its quick commerce vertical.

Swiggy’s food vertical witnessed a revenue growth of 23% YoY to INR 1,636.88 Cr in the quarter, while its GOV growth from the segment was 19.2% YoY.

BofA also trimmed down its EBITDA expectation for Zomato to 35X from 38X earlier, while the same for Swiggy was reduced to 32X from 36X earlier. For the GMV in the quick commerce segment, its expectation was reduced to 0.4X and 0.3X for Zomato and Swiggy from the erstwhile expectation of 0.8X and 0.6X, respectively. 

This also comes a day after international brokerage Macquarie remained cautious around the shares of Swiggy and Zomato. It showed optimism over quick commerce companies like Devyani International and Westlife Foodworld in comparison to the duo.

Macquarie believed that these two QSR companies are comparatively better positioned to benefit from consumption recovery with higher discretionary spend in the restaurant space.