Zomato, Swiggy Get 'Buy' As Anand Rathi Initiates Coverage, Sets Target Price

Anand Rathi Share and Stock Brokers Ltd. has initiated coverage on food delivery aggregators Zomato Ltd. and Swiggy Ltd. with a 'buy' rating.

The brokerage's research arm, in a report released on Friday, set a 12-month target price of Rs 385 on Zomato's stock, which suggested an upside of 35% against the last traded price.

For Swiggy, Anand Rathi set a target price of Rs 705 per share, which suggested an upside of 27% against the last traded price.

The buy rating for the two companies comes amid their ongoing efforts to diversify their portfolios beyond food delivery to capture a larger share of the growing intracity e-commerce market.

While both companies share the same overarching goal of owning this fast-evolving sector, they have taken distinct paths to reach it, according to Anand Rathi.

While Zomato is focusing on an acquisition-led strategy, Swiggy has opted for a more organic growth approach. These strategies reflect their broader vision of building strong and diversified platforms that extend well beyond food delivery, it said.

In terms of revenue, Anand Rathi sees Zomato logging an estimated topline of Rs 19,299 crore in fiscal 2025, which is further expected to rise to Rs 41,131 crore by fiscal 2025. Swiggy's estimated revenue is seen rising from Rs 15,052 crore in fiscal 2025 to Rs 27,259 crore in fiscal 2027.

In the food delivery market—which was valued at around Rs 64,000 crore in 2023— the duopoly between Zomato and Swiggy is firmly entrenched, making it difficult for new entrants to disrupt their dominance, the research report said.

Zomato leads in market share and revenue growth, primarily due to a larger user base and the success of its Gold membership programme, it said. "We expect Zomato to continue to lead in FD (food delivery)."

However, Swiggy, once the market leader in 2020, is catching up with consistent expansion in quick commerce and new initiatives like Bolt, its 10-minute delivery service.

Quick commerce, a rapidly growing segment with a gross merchandise value of Rs 22,400 crore in 2023, is expected to log a compound annual growth rate of 60-80% by 2028, Anand Rathi said. Unlike food delivery, where the duopoly is difficult to break, the quick commerce space can accommodate multiple players, it added.

Zomato and Swiggy, with their established strengths in delivery time and infrastructure, are well-positioned to thrive alongside Amazon, and Flipkart, as consumer preferences shift towards price, delivery speed, and assortment, as per the brokerage.

Zomato's quick commerce arm Blinkit scaled its presence to around 45-50 cities in two years, with its store count at approximately 791 in the second quarter of fiscal 2025, the report pointed out

"New stores are now being opened in cities like Kochi, Ajmer, Alwar, Nagpur, Vishakhapatnam, along with the latest openings in Lonavala, Khandala and Hisar," it added, further noting that Blinkit's target is to reach over 1,000 stores by end of fiscal 2025 and around 2,000 stores by end of calendar year 2026.

Swiggy's Instamart currently has a presence in about 54 cities with the target of being present in around 75 cities, Anand Rathi noted. They increased their dark stores count from around 523 in fiscal 2024 to about 609 in the second quarter of fiscal 2025, with the aim to reach around 1,000 dark stores by the end of the current fiscal.

Shares of Zomato and Swiggy declined on the bourses on Monday, amid the overall fall seen in the stock market. Zomato settled 2.95% lower at Rs 264.65 apiece and Swiggy slumped 1.65% to Rs 532.45 per share on the BSE, as compared to 1.59% decline in the benchmark Sensex.