Swiggy vs Zomato: Which food delivery stock should you buy for long-term? Here’s a 5-point analysis

Swiggy vs Zomato: After a lagged public offer, food delivery giant Swiggy delivered a powerful stock market debut, beating analysts’ estimates. D-Street experts say the new-age tech stock is poised for a strong run on the bourses, similar to its rival Zomato, which is now a multibagger stock.

After an intense competitive period (FY15-18) during which multiple food delivery offerings (Zomato, Swiggy, Faasos, Foodpanda, Uber Eats) contended to stay afloat; the Indian online food delivery market has effectively settled into a comfortable duopoly as most were either bought out or shut shop. 

In food delivery, players have settled into a cozy duopoly. The scale difference (Zomato is 30 per cent bigger than Swiggy) can be explained largely due to the MTU and city presence. Swiggy has lost its lead over FY22-24 in terms of market share as well as efficiency. However, it seems ~4-6 quarters away on most KPIs.

Despite the smaller scale, domestic brokerage HDFC Securities still expects Swiggy to lag Zomato by 150-200bps on GOV growth (FY24-27), as within key inputs, both are likely to be evenly matched on MTUs and AoVs, but there isn’t much room on ordering frequency for Swiggy. Swiggy hit EBITDAM breakeven in Q1FY25, however, it needs to catch up on platform funded-discounts and fixed cost absorption.

Swiggy is a new-age, consumer-first technology company offering users an easy to-use convenient, unified app platform to browse, select, order, and pay for food (Food Delivery), groceries, and household items (via Instamart), with orders delivered to doorsteps through their on-demand delivery partner network. It also offers restaurant reservations (via Dineout) and event bookings (via SteppinOut). Other offerings include product pick-up/drop-off services (via Genie) and other hyperlocal activities (via Swiggy minis, among others). Being among the first hyperlocal commerce platforms, Swiggy has successfully pioneered the industry in India, launching Food Delivery in 2014 and Quick Commerce in 2020.

Zomato is an e-commerce company and a leading online food delivery and restaurant discovery platform in India. Some of the key services provided by the company are: 

• Zomato’s platform facilitates convenient online food ordering, user-generated reviews and ratings, and provides extensive restaurant menus, enabling customers to make informed decisions and enhance their overall dining experience. 

• Hyperpure business offers a direct and reliable supply chain solution, connecting farmers with restaurants by providing high-quality, fresh raw materials necessary for their operations. 

• Zomato has introduced the Zomato Gold membership program, offering exclusive benefits such as discounts and complimentary dishes at partnered restaurants, adding value and enhanced experiences for its subscribers. 

• In 2024, Zomato acquired Grofers and rebranded it as Blink-It. Blink-It operates as a quick-commerce service provider, offering rapid delivery of groceries, fresh produce meat, bakery items, personal care products, baby care items, pet care products, snacks and more within 10 minutes.

Zomato has established itself as the leading player in India’s food delivery industry, capturing a market share of 56 per cent-57 per cent in online food orders in FY24 while, Swiggy, a key competitor, holds a market share of 40 per cent. Other restaurant chains collectively possess a relatively smaller market share of five per cent.

According to domestic brokerage Axis Securities, the food tech platform business, like any emerging segment, has seen its share of evolution and consolidation. The industry started with different players focusing on specific verticals, be it restaurant advertising/listing, food delivery, grocery delivery, etc.

 Over time, it saw exits and consolidation, emergence of new categories, to the current state where there are two dominant players – Zomato and Swiggy – which now compete across restaurant listing/advertising, food delivery, and quick commerce. The players now form a duopoly through a strong moat of expansive network effect on their platforms, with 64 Mn and 53 Mn annual transacting users, respectively, as well as 2,00,000 restaurants and 3,20,000 delivery partners on each of the platforms.

 Zomato has been competing with Swiggy since its formation and sustained and gained the market share because of its better execution capabilities. Both platforms also have quick-commerce businesses, with Swiggy building it in-house, while Zomato acquiring Grofers and pivoting it. Zomato’s execution appears to be better than Swiggy’s, as reflected in its market share gains and becoming the largest player across both segments despite Swiggy’s early-mover advantage.