Brokerages pick Zomato over Swiggy in quick commerce bet

Brokerages including Emkay and CLSA continue to bet big on Zomato over Swiggy banking on better performance by the former’s quick commerce unit as compared to its unlisted rival. 

“Zomato’s higher growth has been aided by the superior performance of its quick commerce,” cited EMkay research. 

Prosus, which holds a 32.6% stake in Swiggy, recently reported that Swiggy’s gross order value (GOV) grew 26% year-on-year (YoY) in CY23. The note also mentioned that IPO-bound foodtech unicorn reported a lower revenue growth rate of 24% YoY, contrasting with Zomato's adjusted revenue growth of 35% YoY during the same period.

According to CLSA's note, Swiggy’s overall GOV growth stood at 26% YoY for CY23. In comparison, Zomato’s food delivery and quick-commerce vertical combined grew by 31% during the same period.  

Swiggy’s adjusted EBITDA improved to negative $261 million in January-December 2023 from negative $531 million in the year-ago period. Zomato reported a positive EBITDA of about $5 million during the same period, CLSA said in a research note.

However, Prosus remained bullish on Swiggy, citing improvement in operational leverage in the company as it continues to focus on profitability, with additional revenue streams of restaurant advertising and platform fees. Prosus expects to see growth aided by increased penetration of Swiggy’s quick commerce business, higher order value, and organic customer growth. 

Also Read

Swiggy launches premium grocery quick commerce vertical Handpicked

Its rival Zomato is also ramping up its quick commerce offerings and plans to increase the number of stores to 1,000 by March 2025. It also expects the number of monthly transacting users (MTUs) on Blinkit to cross its parent's figure in the near future. 

Also, Blinkit achieved a positive adjusted EBITDA in the quarter ended March 2024, the Deepinder Goyal-led company noted in its quarterly results. 

(The story has been updated as per the revised CLSA note.)