Swiggy and Zomato have recently released their quarterly earnings, and the results indicate significant challenges for both companies. The rapid expansion of dark stores has been a substantial factor contributing to their declining profitability. As both firms navigate the tough landscape of quick commerce, it’s an opportune moment to assess their performances and determine which stock presents a more attractive investment opportunity.

Swiggy’s Q4 Earnings Breakdown

Swiggy, boasting a market capitalization exceeding ₹77,000 crore, reported a staggering net loss of ₹1,081.18 crore for Q4 FY25, which marks a significant increase from the ₹553.70 crore loss recorded in the same quarter last year. Despite this downturn, the company experienced a 45% year-over-year increase in revenue, totaling ₹4,410.02 crore. Notably, the gross order value (GOV) grew by 17.6% YoY, showcasing some resilience in its core operations.

Zomato’s Q4 Performance Insights

Zomato, now rebranded as Eternal, faced a dramatic decline in net profit, which plummeted to ₹39 crore, reflecting a 77.71% decrease from the ₹175 crore profit reported in Q4 FY24. On a brighter note, the company’s operational revenue soared to ₹5,833 crore, up 63.76% from ₹3,562 crore a year earlier. Additionally, their food delivery GOV saw a 16% YoY growth, although it dipped by 1% quarter-over-quarter.

Management Perspectives on Future Growth

Swiggy’s Outlook

Swiggy’s CEO, Sriharsha Majety, expressed optimism regarding the company’s future, stating, “We believe that Instamart reached its peak of adjusted EBITDA losses in late Q4, and we expect to progressively unwind these losses moving forward. The pace of this recovery will depend on our average order value and the competitive landscape.”

Zomato’s Competitive Landscape

In contrast, Deepinder Goyal, CEO of Eternal, acknowledged the persistent competitive pressure in the food delivery sector. He noted, “Competition has remained intense, but our market share has stabilized recently, and we are optimistic about potential gains in the future.”

Expert Opinions on Stock Valuation

JM Financial’s Perspective on Swiggy

From a brokerage standpoint, JM Financial highlighted the contrasting performance between Swiggy’s food delivery and Instamart sectors. While food delivery demonstrated robust GOV growth and margin improvements, Instamart’s growth lagged significantly, resulting in a broader EBITDA loss than anticipated. They maintain a ‘Buy’ rating on Swiggy, setting a target price of ₹450, indicating a 44% upside from its current valuation of ₹313.

Nuvama’s Assessment of Zomato

Following Zomato’s Q4 results, Nuvama Institutional Equities revised their target price slightly downward to ₹280 from ₹290 to account for the short-term profitability challenges in Zomato’s quick commerce segment. Despite this, they view the company’s ₹18,800 crore cash balance as a positive sign, indicating prudent cash management and reducing cash burn at the EBITDA level.

Stock Performance Overview

Swiggy’s Market Movement

Swiggy’s stock has experienced a downturn, dropping over 6% in the last five trading days and erasing more than 5% over the past month. Additionally, it has seen a 31% decline over the last six months, with a 26.5% correction since its listing in November 2024.

Zomato’s Recent Trends

In contrast, Zomato’s shares have seen a slight uptick of nearly 2% in the past five days and a 6% increase in the last month. However, it has still faced an 8% decline over the past six months, although it has risen by more than 16% over the past year.

In summary, while both companies face significant challenges, their quarterly performances reveal differing trajectories and potential for recovery, making them essential considerations for investors in the quick commerce space.