Following the release of Zomato’s competitor Swiggy’s yearly data by Prosus, which has 33 percent ownership in Zomato’s competitor Swiggy, brokerages have provided good reaffirmation for the popular food delivery platform known as Zomato.
According to research by Prosus, which is a subsidiary of the South African company Naspers, Swiggy’s gross merchandise value (GMV) for its core food delivery business hit $2.6 billion, which is a year-on-year increase of around 26 percent. Despite this rise, there was a decrease in the average order value, or take rate, which was not found in the case of Zomato. Zomato announced a food delivery gross merchandise volume (GMV) of $3.2 billion for the calendar year 2022. This figure also represents a gain of 26 percent year over year.
The data was evaluated by Kotak Institutional Equities, which came to the conclusion that Zomato has a GMV share of 55:45, suggesting that the company has great execution and maintains consumer loyalty despite having lowered discount promotions on the site. Zomato was given a “buy” recommendation by the investment firm, which estimated that the company was worth Rs. 95.
Swiggy’s meal delivery company’s GMV climbed sequentially by 5% in the second half of 2022, according to the results of Prosus. This growth was lower than the 8% rise that Zomato recorded.
A year-over-year rise of 80 percentage points brings Swiggy’s stated losses for the year 2022 to a total of $545 million. These losses were attributed by JM Financial to Swiggy’s peak investments in Instamart, which is the company’s rapid commerce division.
JM Financial made the following statement in response to the findings: “Prosus’ results suggest the tug of war between Zomato and Swiggy continues, with both incumbents working hard to hold on to their respective market shares in the food delivery business.” The investment bank reaffirmed its “buy” recommendation on Zomato and set a target price of Rs 105 for the stock. This decision was made in light of Zomato’s robust market leadership in the food aggregator industry, better profitability trends, and superior execution in comparison to Swiggy.
Citibank has reaffirmed its “buy” recommendation on Zomato stock with a target price of Rs 84, demonstrating that it shares this upbeat outlook. Zomato is now more profitable than Swiggy, which is one of the reasons why the bank backs the industry-wide emphasis on profitability.
According to JM Financial, the market for online meal delivery in India is still a long way from being an outright monopoly like the one Meituan has established in mainland China. Instead of concentrating entirely on expanding their market share, Zomato and Swiggy have placed a higher priority on increasing their profitability.
Both aggregators are expected to develop at a rate that is 1.2–1.5 times faster than the organised food services sector as a whole, according to experts, who note that there is no substantial new competition coming.
The share price of Zomato ended the day on the National Stock Exchange at 74.95 rupees, which is a rise of 0.13 percent from where it was the previous day.
