Zomato Ltd. is ahead in profitability compared to Swiggy Ltd. in food delivery business, with its quick commerce business breaking even in March 2024, Bernstein said. The brokerage compared both the food delivery businesses’ recent earnings and gave key takeaways for Zomato Ltd.
Zomato retains edge over Swiggy in quick commerce, CLSA had said on Wednesday.
Bernstein has kept an ‘outperform’ rating on Zomato, with a target price Rs 335 per share, which implied a 20% upside from Wednesday’s closing price. The brokerage doesn’t have coverage on the newly listed Swiggy Ltd.
Zomato has higher market share compared to Swiggy, the brokerage said. Its market share is at 57.6% against 42% market share of Swiggy’s. Stronger execution and wider reach helped Zomato beat Swiggy in terms of market share.
Monthly transactional users of Zomato is 41% higher than Swiggy. The latter boasts of order frequency. “Higher Order frequency for Swiggy. Swiggy’s stickier customer base has led to a stronger affinity towards its horizontal loyalty program ‘Swiggy One’, which is applicable across food delivery, quick commerce and dining out verticals.”
Swiggy’s contribution margin is 100 basis points lower, however adjusted Ebitda margin for Zomato is 3.5%, against 1.6% for Swiggy, Bernstein said.
As far as quick commerce business is concerned, Blinkit has 64% relative market share, compared to 36% of Instamart. Blinkit’s average order value is 28% higher than its competitor because of its presence in National Capital Region and higher non grocery mix, Bernstein said. Dark store count for Zomato is 791, compared to 609 for Instamart.
Adjusted Ebitda loss for Swiggy is 10.6%, while Zomato’s quick commerce wing Blinkit broke even at -0.1, Bernstein said.
Zomato is also well positioned in terms of restaurant partners, according to Bernstein. “Average monthly restaurant partners at Zomato stood at 292,000 as of Q2FY25, vs Swiggy at 233,000.”
Restaurants also generates higher gross order value. Zomato is generating Rs 1.33 million in GOV compared to Rs 1.23 million on Swiggy, driven by a higher customer base, Bernstein said.
Swiggy food delivery gross merchandise value grew at 14% annually in the second quarter, compared to Zomato GMV at 21%. Swiggy’s management said the GOV for the food delivery industry will grow at 18-22% CAGR with steady state margins at 5%.
“Management expects good traction in the near term with the launch of 10 min delivery offering (Bolt), available of 400 cities,” Bernstein said citing Swiggy’s management.
In terms of dark store expansion, Swiggy and Zomato both have aggressive plans in this financial year. They expected to end the year with 1,000 dark store.
Zomato, Swiggy Share Price
Swiggy’s share price jumped 6.57% to Rs 534.80 apiece, highest level since Dec. 3. It pared gains to trade 3.65% higher at Rs 537.00 as of 09:59 a.m.
Zomato’s stock rose 2.91% during the day before paring some gains to trade 2.29% higher at Rs 286.25 apiece as of 09:57 a.m., as compared to 0.19% decline in the NSE Nifty 50.
. Read more on Markets by NDTV Profit.Bernstein has kept an ‘outperform’ rating on Zomato, with a target price Rs 335 per share, which implied a 20% upside from Wednesday’s closing price. Read MoreMarkets, Business, Notifications
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