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.
Swiggy Instamart and Zomato’s BlinkIt cater to consumers seeking quick grocery solutions, capitalizing on the increasing demand for online shopping. As internet penetration deepens and consumer trust grows, the industry is poised for further growth, with innovations like dark kitchens and AI-powered logistics expected to improve service efficiency and reach tier-2 and tier-3 cities.
Market Landscape
Swiggy and Zomato are the two main competitors in India’s food delivery market, each striving to capture a larger share. Swiggy dominates with its aggressive expansion into groceries through Instamart, while Zomato focuses heavily on restaurant delivery and its premium services like Zomato Gold. Besides this Zomato also has a strong foothold in the quickcommerce grocery business through BlinkIt which has helped it significantly to turn profitable.
Additionally, both platforms charge a platform fee to restaurants, but Swiggy is often seen offering slightly lower discounts compared to Zomato in the online food business to expand its customer base. Discounts play a crucial role in customer acquisition, with both platforms frequently offering deals, Swiggy has also been more aggressive with discounting, especially in the grocery segment.
However, BlinkIt, now owned by Zomato, leads in quick-commerce (instant grocery delivery) with a 50%+ market share, while Swiggy Instamart follows closely with around 30%. Swiggy’s strong logistics network and broader product offerings give it an edge, while Zomato’s premium subscriptions and dining services attract loyal customers.
Share Price
Zomato: The shares of Zomato closed at Rs. 269.65 up by 4.36% from its previous close of Rs. 258.4 as of November 14, 2024.
Swiggy: The shares of Swiggy closed at Rs. 421.6 down by 5.55% from its previous close of Rs. 456 as of November 14, 2024.
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Targets given by Macquarie
Analysts remain optimistic about Swiggy’s future growth potential, with Macquarie forecasting a target price of Rs 700 in the long term. The brokerage believes Swiggy is well-positioned to close the gap with Zomato in food delivery, given its aggressive expansion strategies and strong market presence. However, in the short term, Macquarie has an ‘underperform’ rating on Swiggy, citing the intense competition and high operational costs, with a target price of Rs 325.
For Zomato, Macquarie has revised its target to Rs 130, reflecting a more cautious outlook amidst fierce competition. The brokerage’s reassessment of Blinkit’s unit economics and Zomato’s core food delivery business led to a downward revision of earnings estimates, though it raised the target price based on a more favorable discount rate assumption.
Conclusion
While both Swiggy and Zomato dominate India’s food delivery landscape, they exhibit distinct strengths. Zomato leads in quick-commerce through BlinkIt with over 50% market share and focuses on premium services, while Swiggy maintains strong competition through aggressive expansion and discounting strategies, particularly in groceries.
Despite Macquarie’s optimistic long-term outlook for Swiggy (Rs 700 target), their short-term view remains cautious. The sector continues to evolve with both players innovating through dark kitchens and AI-powered logistics to capture market share.
Written By: Dipangshu Kundu
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