Zomato vs Swiggy complete comparison; Which one should you buy?
Zomato vs Swiggy complete comparison: The food delivery and quick grocery business in India has experienced significant growth in recent years, driven by shifting consumer preferences, urbanization, and a desire for convenience. Leading companies such as Swiggy and Zomato have emerged as dominant players in the food delivery sector, offering a wide variety of cuisines from local eateries and chains, along with speedy delivery services and user-friendly mobile apps.
These platforms have also expanded their offerings to include grocery deliveries through partnerships with supermarkets and local kiranas. To provide a comprehensive comparison between Zomato and Swiggy, we will analyze their future prospects, financial performance, brokerage targets, and expansion strategies.
Stock Performance:
Zomato Limited, with a market capitalization of Rs. 2.34 lakh crores, saw its shares rise by approximately 0.5 percent on the BSE, reaching an intraday high of Rs. 246.4 on Friday. Over the past year, the stock has delivered positive returns of around 80.5 percent, with a 15 percent increase in the last month.
On the other hand, Swiggy Limited, with a market capitalization of Rs. 1.1 lakh crores, experienced a decline of nearly 3.8 percent on the BSE, hitting an intraday low of Rs. 488.5 on Friday. Since its listing, the stock has generated positive returns of about 8 percent, but has seen a decrease of 9.5 percent in the last month.
Brokerage Targets:
The foreign brokerage firm Jefferies recently downgraded Zomato Limited’s stock to a ‘hold’ rating and reduced the target price by 18% from Rs. 335 to Rs. 275 per share. This adjustment represents a potential upside of only 13% from Friday’s closing price of Rs. 243.
On the other hand, the foreign brokerage firm Bernstein downgraded Swiggy Limited’s stock to a ‘buy’ rating with a target price of Rs. 635 per share, indicating a potential upside of nearly 29% from Friday’s closing price of Rs. 492.
In terms of strategic focus and expansion strategy, Zomato is strategically expanding into new cities while carefully assessing market viability. The company has recently opened 152 new stores and seven warehouses, with a significant portion of capital expenditure allocated to this expansion. While maintaining a strong presence in the top eight cities, Zomato is also exploring opportunities in newer markets.
Swiggy, on the other hand, has introduced Swiggy Bolt, a quick delivery service operating in 400 cities, specializing in last-mile deliveries within a 2-kilometer radius. This initiative aims to enhance consumer engagement by providing faster services and meeting new customer demands.
To enhance user experience, Swiggy is implementing various initiatives, including affordability programs and improved app features. The company also plans to double the area of its dark stores to 4 million square feet by March 2025, reflecting its confidence in growing demand.
Management emphasizes that the quick commerce market is still in its early stages, offering significant growth opportunities. Swiggy has expanded its operations to 76 cities nationwide and will soon launch as a standalone app. Instamart, one of Swiggy’s key services, will continue to be accessible through Swiggy’s unified platform, which has shown strong growth in the past year.
The Instamart app enhances user experience by providing quick access to Swiggy’s innovative quick-commerce services, ensuring greater convenience for customers.
Financials:
Revenue from Operations
Zomato: The company showed strong growth in operational revenue, with a year-on-year (YoY) increase of approximately 68.5%, rising from Rs. 2,848 crore in Q2 FY24 to Rs. 4,799 crore in Q2 FY25.
Swiggy: Revenue from operations grew by about 30.3% YoY during the same period, increasing from Rs. 2,763 crore in Q2 FY24 to Rs. 3,601 crore in Q2 FY25.
Profit After Tax (PAT)
Zomato: The company reported a remarkable YoY growth in net profit, surging by nearly 389%, from Rs. 36 crore in Q2 FY24 to Rs. 176 crore in Q2 FY25.
Swiggy: While still operating at a loss, Swiggy reduced its net loss by 4.7% YoY, narrowing from Rs. 657 crore in Q2 FY24 to Rs. 626 crore in Q2 FY25.
Future Outlook
Zomato: The management remains confident about growth prospects despite potential economic slowdowns, noting no observable impact on the food delivery business. They maintain a cautious approach to discounting and do not intend to increase discounts even with the recent capital raise. Profitability is expected to improve as efficiencies in the quick commerce segment continue to mature.
Swiggy: The company aims to achieve breakeven in contribution margins for Instamart by the end of 2025. They continue to invest in infrastructure and marketing while exploring new revenue streams, such as partnerships and advertising, to drive profitability.
About the Companies
Established in 2010, Zomato Limited is a leading online food service platform in terms of the value of food sold. Their offerings include
Established in 2014, Swiggy Limited is India’s leading on-demand convenience platform. This innovative technology company prioritizes the needs of consumers by providing a user-friendly convenience platform that can be accessed through a single app.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.