Zomato vs Swiggy: Which Stock Offers Better Value After the Recent Correction?
Zomato vs Swiggy : India’s top food delivery giants, Zomato and Swiggy, have faced a significant correction in their stock prices amid a broader sell-off in the stock market. With increasing competition in the quick commerce (QC) space and concerns over valuation, investors are wondering: Which stock offers better value after the recent dip?
Let’s dive into the recent performance of both companies, their financial standing, and what analysts are saying about their future.
Sharp Correction in Zomato and Swiggy Stocks
Both Zomato and Swiggy have seen their stock prices decline significantly in recent months, reflecting concerns over profitability, competition, and the broader correction in Indian equities.
- Zomato‘s stock, which surged between March 2023 and December 2024, has now fallen 32.6% from its all-time high of ₹304.70. The stock recently slipped below ₹200 for the first time in eight months and is currently trading at ₹205 per share.
- Swiggy has experienced an even sharper fall, with its stock correcting 43% from its peak and currently trading at ₹356 per share—even below its IPO price of ₹390.
Why Are Zomato and Swiggy Falling?
Several factors have contributed to this correction:
- Market-wide Sell-off: Investors are turning cautious towards new-age tech stocks amid volatility in the equity markets.
- Intense Competition in Quick Commerce: Flipkart’s Minutes and Amazon’s Now services are rapidly expanding, posing a threat to Zomato’s Blinkit and Swiggy’s Instamart.
- Heavy Investments Impacting Profitability: Both companies are aggressively expanding their dark store network to remain competitive, affecting their financials.
However, analysts believe that the correction presents an attractive buying opportunity, given that both stocks are now trading at more reasonable valuations.
Which Stock Is a Better Buy?
Leading brokerage JM Financial has analyzed the two stocks and prefers Zomato over Swiggy due to several factors:
- Zomato is the market leader in food delivery and quick commerce in terms of revenue and gross order value (GOV).
- Stronger profitability: Zomato is the only hyperlocal delivery company in India generating free cash flows while maintaining strong revenue growth.
- Better execution and management: The company has a well-established network and execution strategy, helping it stay ahead of competitors.
Price Targets and Valuation
| Stock | Current Price (₹) | Target Price (₹) | Upside Potential (%) |
|---|---|---|---|
| Zomato | 205 | 280 | 34.6% |
| Swiggy | 356 | 500 | 41.7% |
JM Financial has a ‘Buy’ rating on both stocks, but prefers Zomato for its stronger fundamentals and market leadership.
Quick Commerce: Will Flipkart and Amazon Disrupt the Market?
The rise of Flipkart Minutes and Amazon Now has intensified the quick commerce battle, but incumbents like Zomato and Swiggy still hold the edge for the following reasons:
- High brand recall: Consumers trust Zomato and Swiggy for fast and reliable deliveries.
- Established hyperlocal expertise: Years of experience in food delivery give them a better understanding of local demand trends.
- First-mover advantage: Unlike Flipkart and Amazon, Zomato and Swiggy already have an extensive network of dark stores and last-mile delivery systems.
While new entrants may increase competition, analysts believe execution and efficiency—not just financial backing—will determine long-term winners.
Final Verdict: Should You Buy Zomato or Swiggy?
Given the recent correction, both stocks present attractive investment opportunities. However, Zomato stands out due to its profitability, market leadership, and strong execution. While Swiggy offers higher upside potential, its financials and competitive positioning are relatively weaker.
Q&A Section: Key Takeaways at a Glance
Q1: Why have Zomato and Swiggy stocks fallen recently?
A: The correction is due to broader market sell-off, rising competition in quick commerce, and increased investments affecting profitability.
Q2: Which stock is better: Zomato or Swiggy?
A: Analysts prefer Zomato because of its profitability, strong execution, and market leadership. However, Swiggy offers a higher potential upside based on current target prices.
Q3: Will Flipkart and Amazon disrupt the quick commerce industry?
A: While they pose a competitive threat, Zomato and Swiggy have a strong first-mover advantage, better execution, and brand trust, making them difficult to displace.
Q4: What are the target prices for Zomato and Swiggy?
A: JM Financial has set a target price of ₹280 for Zomato (34.6% upside) and ₹500 for Swiggy (41.7% upside).
Q5: Should investors buy Zomato or Swiggy after the correction?
A: Both stocks are attractive at current levels, but Zomato is the preferred pick due to its profitability and leadership position.
With food delivery and quick commerce continuing to grow, both Zomato and Swiggy remain key players in India’s hyperlocal delivery space. While competition will increase, their established networks and execution strengths make them strong long-term investments.
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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.