The brokerage said Swiggy’s Instamart is forecast to secure a 31% market share in quick commerce by FY27, further solidifying Swiggyโs position in this high-growth segment.
In comparison to Zomato, which dominates Indiaโs food delivery market with a 53% share, Swiggy holds a respectable 38% share, making it a strong second player. While Zomato has an edge in profitability and scale, Axis Capital notes that Swiggy is steadily closing the gap.
“Overall, we believe that in scale and profitability, although Swiggy lags Zomato, there has been some directional improvement in Swiggyโs profitability, as the gap with its peer is narrowing with some quick fixes, primarily in cost optimization. Swiggy might not be able to match Zomatoโs scale, but it is likely to cover the profitability gap,” said Axis Capital.
Swiggyโs food delivery business is projected to grow at a 23% CAGR between FY24 and FY27, driven by increasing user engagement, higher order frequency, and improved cost management. The brokerage values Swiggyโs food delivery arm at a 10% discount to Zomato, reflecting its smaller scale but improving operational metrics.
Swiggyโs track record of innovation and its recently bolstered leadership team are additional factors that set it apart. The brokerage said Swiggyโs ability to consistently introduce new services, such as the quick food delivery initiative โBolt,โ which aligns with changing consumer behavior. Axis Capital also flagged potential risks to its projectionsโ heightened competition in the quick commerce space from players like Blinkit and Zepto, along with a broader consumption slowdown, could pose challenges. Despite these risks, the brokerage remains confident in Swiggyโs ability to sustain its growth trajectory and deliver value to investors.
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