According to a joint report by Bain & Company and Swiggy, India’s food delivery market is expected to grow at a compound annual growth rate (CAGR) of 18 percent, reaching over Rs 2 lakh crore by 2030. The rise of user-friendly apps and technology-driven driver networks has greatly boosted orders and deliveries of ready-to-eat food, while evolving consumer expectations have further accelerated this growth in the past decade.
What’s the News?
The shares of Eternal (Zomato) and Swiggy continued to decline after a report by Bloomberg stated that their competitor Zepto had planned to raise $250 million through a secondary share sale before its Initial Public Offering. Zepto, through this move, aims to amplify domestic ownership ahead of its proposed IPO.
As per the Bloomberg report, the private equity divisions of Motilal Oswal Financial Services Ltd. and Edelweiss Financial Services Ltd. are in discussions with Zepto for a secondary share sale.
Additionally, foreign brokerage Macquarie remains cautious about food delivery players like Swiggy and Zomato. However, it is anticipated that higher discretionary income, backed by recent favorable tax policies, will support a recovery in the franchise segment, advantaging companies like Devyani International and Westlife Foodworld.
Brokerage Firm BofA Securities downgraded the shares of Food Delivery Giants- Zomato and Swiggy:
Zomato Ltd
The shares of Zomato Ltd, with a total market capitalization of Rs 1.96 Lakh Crores on Wednesday, were trading at Rs 201.9 per share, which was 3.8 percent down from the previous closing price of Rs 209.81. The shares are trading at a discount of 33 percent from its 52-week high of Rs 304.7 apiece. The shares of Zomato have declined by 9.27 percent since Monday, March 24, 2025.
On March 26, 2025, BofA Securities downgraded the shares of Zomato to “neutral” from its previous rating of “buy” and has reduced its target price to Rs 250 per share from Rs 300.
Zomato Ltd operates a B2C technology platform connecting customers, restaurant partners, and delivery partners across multiple services like food delivery and dining-out options. Its key business verticals include Food Delivery, Hyperpure, Quick Commerce, & Going Out.
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Swiggy Ltd
The shares of Swiggy Ltd, with a total market capitalization of Rs 74,106 Crores on Wednesday, were trading at Rs 324.6 per share, which was 3.8 percent down from the previous closing price of Rs 337.5. The shares are trading at a discount of 47 percent from its 52-week high of Rs 617 apiece. The shares of Swiggy have declined by 7.6 percent since Monday, March 24, 2025.
The brokerage double downgraded Swiggy from a “buy” rating to an “underperform” rating and cut its price target sharply, from Rs 420 to Rs 325 per share. Swiggy’s price target is now below its IPO price of Rs 390 per share.
Swiggy Ltd operates across over 600 cities, offering services like food delivery, quick commerce through Instamart, and package delivery via Swiggy Genie. Its key business vertices include Food Delivery, Out of Home Consumption, Quick Commerce, Supply Chain & Distribution & Platform Innovations.
BofA Securities’ View on the Industry
Though the brokerage remains positive on medium-term prospects, the anticipation of easing growth and the slow pace of margin improvement in the food delivery sector led to the downgrades of Swiggy and Zomato shares.
Brokerage expects higher competition for the next 12-15 months as new platforms launch and existing players expand into each other’s markets. These new platforms are likely to offer higher initial discounts, pushing existing companies into expansion mode, which may lead to increased losses. The competition will also drive higher marketing costs, platform discounts, and reduced delivery charges. Additionally, dark store rentals and wages are expected to rise.
Written By Adhvaitha Nayani
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