The brokerage has downgraded Zomato from ‘Buy’ to ‘Neutral’, and cut its price target to ₹250 per share, and Swiggy to ‘Underperform’ from ‘Buy’ with price target slashed to ₹325.
Shares of Zomato ended 2.5% lower at ₹203.3 on Wednesday, and Swiggy closed at ₹323.9, down 3.9%.
BofA’s price targets imply 23% and 0.4% upsides for Zomato and Swiggy, respectively, from Wednesday’s closing level. “Between Zomato and Swiggy, we find Zomato better placed with scale and first-mover advantage in quick commerce, leading to better unit economics, higher margins and a stronger cash position (hence, Neutral). Given Swiggy’s higher losses in quick commerce, any prolonged price war would delay breakeven (hence, Underperform),” it said.
Shares of Zomato have declined 26%, and Swiggy is down 40.2% this year.
