The competition between India's two major food delivery aggregators, Swiggy Ltd. and Zomato Ltd., intensified in the first half of the current financial year, with the latter making significant strides in profitability and market share.
Here is a detailed look at their financials, operational metrics and future outlook.
Financials
Zomato emerged as the stronger performer in terms of profitability, reporting an Ebitda profit of Rs 403 crore and a margin of 4.5% during the first half of the fiscal. Swiggy posted an Ebitda loss of Rs 1,099 crore.
Despite a significant net profit of Rs 1,237 crore for Swiggy during the period, largely driven by one-off adjustments, Zomato's sustained growth led to a net profit of Rs 429 crore.
Segmental Revenue Growth
Both companies showed robust growth in their key verticals, but Zomato's performance in quick commerce stood out with a 136% year-on-year growth as compared to Swiggy's 57%.
Operational Metrics: GOV Growth
The gross-order-value growth underscored Zomato’s growing dominance. Swiggy's slower GOV growth suggests a continued loss in market share to Zomato.
In the first half, Zomato recorded a 55% YoY growth in GOV, compared to 30% for Swiggy. On a quarter-on-quarter basis, growth in the quick commerce segment was neck and neck at 24% for Swiggy and 25% for Zomato.
Key Updates In H1 FY25
Zomato
Raised Rs 8,500 crore through a qualified institutional placement to strengthen its balance sheet.
Acquired Paytm’s entertainment ticketing business, expanding its portfolio into leisure services.
Launched the District App to cater to the growing going-out and ticketing segments.
Swiggy
Announced a Rs 11,000-crore initial public offering, signalling its confidence in long-term growth.
Approved investments of up to Rs 1,600 crore in its premium food delivery unit, Scootsy.
Incorporated a new unit for sports, amusement and recreation activities to diversify revenue.
Future Outlook
Zomato
Expects Ebitda margin to stabilise between 4% and 5%.
Aggressive store-expansion plans, targeting 1,000 stores by March 2025 and 2,000 by December 2026.
Swiggy
Aims to achieve adjusted Ebitda break even by December 2025.
Plans to double its dark-store capacity by March 2025, with a target of 2,000 orders-per-day per store.
Valuations
Zomato's valuation at 15.3 times the market cap to sales is significantly higher than Swiggy's 8.5 times.
In a note on Wednesday, CLSA said the gap between Swiggy and Zomato stopped widening but persists, particularly in quick commerce. The latter still remains 81% larger in GOV and 44% larger in monthly transaction users in the quick commerce space. Zomato also leads in food-delivery growth, with a 21% annual increase in GOV, compared with Swiggy's 15% rise.
The development comes after newly-listed Swiggy announced its September-quarter results, where the company's loss widened to Rs 626 crore from Rs 611 crore in the last quarter.
While Swiggy's quarterly results show improvements, including a 76% growth in quick commerce GOV and adjusted revenue rising 114%, its adjusted Ebitda break-even guidance lags Zomato's timeline by over two years. Zomato achieved consolidated adjusted Ebitda break even in the first quarter of the last fiscal, while Swiggy expects to reach break even by the third quarter of fiscal 2026.
CLSA reiterated its 'outperform' rating on Zomato with a target price of Rs 370 apiece, citing a strong momentum in the quick commerce segment and its leadership position. The brokerage currently does not track Swiggy but Motilal Oswal Financial Services Ltd. has a 'neutral' rating on the stock.
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