HSBC sees 19% downside in Zomato stock; cuts rating to reduce

As life normalises post-COVID, HSBC predicts a sharp growth in volumes, led by office orders coming through. However, that would also mean AOVs moderating

After a stellar listing in July that saw its market-capitalisation (market-cap) hit the Rs 1 trillion mark, analysts now seem to be turning cautious on the stock of food delivery major Zomato. In a report dated August 4, HSBC has cut its rating on Zomato to ‘reduce’ and has maintained a price target of Rs 112 on the stock, translating into a downside of Rs 26, or 19 per cent, from the current levels.

Food delivery investors in India, according to HSBC, face three key challenges. First, unlike most e-commerce segments, food delivery will need to see profound cultural evolution,