Food delivery companies have come into focus given Swiggy’s recent debut and share movement after listing. So far Zomato was the only listed entity in this space. With Swiggy’s entry, there is no doubt increased competition in that space.
The question then is what’s the better stock to bet on at current levels. Do valuations support Zomato or would it be appropriate for investors to put their money in the newly listed Swiggy shares?
Here is a quick comparison of the valuation of both the Swiggy and Zomato shares –
Swiggy – Zomato : Valuation table
Motilal Oswal Initiates Coverage on Swiggy
In its latest report on Swiggy, Motilal Oswal has initiated coverage with a ‘Neutral’ rating and a target price of Rs 475 per share. The brokerage sees potential in Swiggy’s position to expand its customer base, boost order volumes and values, and improve both unit economics and profitability.
Motilal Oswal highlights that Swiggy’s unified platform has become a key tool for urban consumers, offering both food delivery and grocery services within a single app.
This integrated approach allows Swiggy to leverage a combination of convenience, high-frequency usage, and customer loyalty, which makes it a strong competitor in the sector.
Although Zomato currently leads in food delivery and quick commerce, Swiggy’s all-in-one app model promotes cross-utilization across services, enhancing its operational efficiency.
Quick Commerce Opportunity for Swiggy
Motilal Oswal views quick commerce as a transformative opportunity, presenting Swiggy with the chance to redefine how Indian consumers shop for essentials and other goods.
The brokerage believes Swiggy has the potential to rank among the top three players in this fast-growing market segment, driven by demand for fast and convenient delivery services.
Challenges and Competitive Landscape
Despite Swiggy’s innovative approach and role as a pioneer in both food delivery and quick commerce, Motilal Oswal notes that Swiggy has seen some erosion in its leadership position.
Brokerage view on Zomato
Which is a better investment opportunity: Zomato or Swiggy ?
Motilal Oswal said that the competition between Swiggy and Zomato is intensifying, with Zomato currently holding the lead across both food delivery and quick commerce—two critical areas where both companies are vying for dominance.
While Zomato has established itself as the primary market leader, the report suggests that the battle for the urban affluent consumer’s wallet share is far from settled, and it is still too early to declare a definitive winner.
Motilal Oswal highlights that although Zomato continues to increase its market share in food delivery, Swiggy’s user base, measured by Gross Order Value per Monthly Transacting User (GOV/MTU), shows a high level of maturity and loyalty, indicating strong engagement among its existing customers.
In the quick commerce segment, Swiggy’s Instamart initially pioneered the category, but Zomato’s Blinkit has since captured an early lead, with Zepto also emerging as a strong player through effective execution strategies.
Motilal Oswal points out that this nascent market presents ample opportunities for each player to differentiate through unique stock-keeping units (SKUs) and strategic approaches, suggesting that the competition will continue to evolve without any immediate conclusive outcomes.
Listing Day Stock Performances of Zomato Vs Swiggy
On its listing day, Wednesday, November 13, Swiggy’s share price saw a strong debut, opening at Rs 420 per share on the NSE, marking a 7.69% increase over its issue price of Rs 390. On the BSE, Swiggy opened at Rs 412, reflecting a 5.64% rise from the issue price.
In comparison, Zomato, which listed on Friday, July 23, 2021, has since recorded a significant growth trajectory. The data indicates that Zomato’s share price has surged by 122.37%, outperforming its sector by 81.77% over the past year, and marking a total gain of 132% since its initial listing.
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