The food delivery and quick grocery business in India has seen tremendous growth in recent years, driven by changing consumer habits, urbanization, and a growing preference for convenience.
Companies like Swiggy and Zomato dominate the food delivery landscape, offering a vast range of cuisines from local restaurants and chains, with fast delivery times and user-friendly apps.
These platforms also expanded their services to include grocery deliveries through partnerships with supermarkets and local kiranas.
Following is a comparison between Zomato and Swiggy covering their future outlook, financial performance, brokerage targets, expansion strategies, and more:
Here is a comparison between Zomato and Swiggy:
Stock Performance
With a market cap of Rs. 2.34 lakh crores, the shares of Zomato Limited surged marginally around 0.5 percent on BSE to hit an intraday high at Rs. 246.4 on Friday. Over the last one year, the stock has delivered positive returns of about 80.5 percent, and has gained nearly 15 percent in one month.
With a market cap of Rs. 1.1 lakh crores, the shares of Swiggy Limited slumped nearly 3.8 percent on BSE to hit an intraday low at Rs. 488.5 on Friday. Since the day of listing, the stock has delivered nearly 8 percent of positive returns, but negative returns of 9.5 percent in the last one month.
Brokerage Target
The foreign brokerage firm Jefferies downgraded the stock to a ‘hold’ rating on Zomato Limited and cut the target price by about 18 percent from Rs. 335 to Rs. 275 per share, representing an upside of just 13 percent from Friday’s closing price of Rs. 243.
The foreign brokerage firm Bernstein downgraded the stock to a ‘buy’ rating on Swiggy Limited with a target price of Rs. 635 per share, representing a potential upside of nearly 29 percent from Friday’s closing price of Rs. 492.
Strategic Focus & Expansion Strategy
Zomato is strategically expanding into new cities while carefully evaluating market viability and potential. The company has opened 152 new stores and seven warehouses, with a significant portion of capital expenditure directed towards this expansion. While maintaining a strong focus on the top eight cities, Zomato is cautiously exploring newer markets.
Swiggy has launched Swiggy Bolt, a quick delivery service now operational in 400 cities, specializing in last-mile deliveries within a 2-kilometer radius. This initiative aims to enhance consumer engagement by offering faster services and catering to new customer needs.
To improve the user experience, Swiggy is rolling out several initiatives, such as affordability programs and enhanced 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 increasing demand.
Management highlights that the quick commerce market is still in its nascent stages, presenting significant growth opportunities. Swiggy has recently expanded its operations to 76 cities nationwide and will soon launch as a standalone app. Instamart, one of Swiggy’s flagship services, will continue to be available through Swiggy’s unified platform, which has demonstrated strong growth over the past year.
The Instamart app further enhances the user experience by offering quicker access to Swiggy’s innovative quick-commerce services, ensuring greater convenience for customers.
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Financials:
Revenue from Operations
Zomato: The company demonstrated robust growth in operational revenue, registering a year-on-year (YoY) increase of approximately 68.5 percent, 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 percent 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 percent, 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 percent 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 OND 2025. The company continues to invest in infrastructure and marketing while exploring new revenue streams, such as partnerships and advertising, to drive profitability.
About the Companies
Incorporated in 2010, Zomato Limited is one of the leading online Food Service platforms in terms of the value of food sold, while its offerings include food delivery, dining-out services, Loyalty programs, and others.
Founded in 2014, Swiggy Limited, India’s pioneering on-demand convenience platform, is a new-age, consumer-first technology company offering users an easy-to-use convenience platform, accessible through a unified app.
Written by Shivani Singh
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